DFW cities with highest appreciation potential

Dallas, Texas
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DFW cities with highest appreciation potential

Nitin Gove
Member since 2023 · 18 posts · 12 votes

I learned that cash flow is pretty difficult in DFW. So wanted to check with this community about which are the cities which have highest appreciation potential in 2-5 years near term. 

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Andy WebbPro Member
Rental Property Investor · Carrollton, TX · Member since 2013 · 750 posts · 538 votes
3y

Buy a distressed house at a discount and fix it up thereby creating your own equity through the process.  Then you don't have to worry about appreciation or a huge out-of-pocket downpayment.  Cash flow will be minimal, but should be there.  Sell in a few years and cash out that equity and reinvest.  Easy process to repeat.

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  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    2y

    @Nitin Gove

    I stay in cheaper central areas near downtowns and freeways like Arlington, Grand Prairie and Fort Worth. These seem to have the highest appreciation due to the demand for starter homes. And not everyone wants to commute 30-40 min to work.

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  • Jason Sung
    Investor · Dallas, TX · Member since 2019 · 91 posts · 30 votes
    2y
    Quote from @Andy Webb:
    Quote from @Jason Sung:
    Quote from @Andy Webb:

    Buy a distressed house at a discount and fix it up thereby creating your own equity through the process.  Then you don't have to worry about appreciation or a huge out-of-pocket downpayment.  Cash flow will be minimal, but should be there.  Sell in a few years and cash out that equity and reinvest.  Easy process to repeat.

    Hi @Andy Webb What would be your recommendation for buying a distressed property in this market in DFW? Most people do not have enough cash to buy a distressed property that banks do not lend. Also, using hard money in this market is very risky.


     Hi Jason - Why do you view HM in this market as being risky?  If your numbers work and you are buying with a decent equity buffer, I don't see a problem.  In fact, in most cases I would prefer to buy with hard money or some type of private money - I will have a lower out of pocket = lower capital at risk in the long run.

    We are shopping for properties in the DFW area (and elsewhere) right now, and mostly look for distressed houses that we would buy using Hard Money. Know your numbers, know the cost of renovations, and have a clear game plan to buy, do the rehab and get back out into conventional or some sort of commercial/DSCR product on the back end - you should be fine.

    Andy

    @Andy Webb, I agree with you. If numbers makes sense, why not. Are you buying from wholesalers or do you do direct mailing? I am relatively new to RE game and I have checked many deals from wholesalers but do not see any deal that could cash flow, especially after cash-out refi (with high interest rate) after the rehab is done. 

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  • Jason Sung
    Investor · Dallas, TX · Member since 2019 · 91 posts · 30 votes
    2y
    Quote from @John Morgan:

    @Nitin Gove

    I stay in cheaper central areas near downtowns and freeways like Arlington, Grand Prairie and Fort Worth. These seem to have the highest appreciation due to the demand for starter homes. And not everyone wants to commute 30-40 min to work.

     @Nitin Gove, I wonder what you mean by 'cheaper'. Do you mind sharing what is your target price range in this market?

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  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    2y

    @Jason Sung

    180-220k for me. The most I’ve paid for a turnkey property in the DFW areas was 260k in Fort Worth. But my sweet spot is around 200k that rents for around 2k/month.

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  • Andy WebbPro Member
    Rental Property Investor · Carrollton, TX · Member since 2013 · 750 posts · 538 votes
    2y

    @Jason Sung - most of the leads we review are ultimately from wholesalers, and you are correct, very few of them make any sense. I am seeing more activity on the MLS now compared to a few years ago, especially outside of DFW proper. Nevertheless, cash flow remains thin due to high mortgage rates, high property taxes, an high insurance rates at the moment.

    We are also looking out of state where the taxes and insurance are less onerous.

    One highlight with respect to property taxes in Texas, if you do buy a rehab property.  If it is a rehab property, you should be getting it at a discount...be sure to protest your taxes down to your purchase price.  A constitutional amendment recently passed in TX that puts a cap in place for non-homestead properties (used to only be in place for homesteads), capping possible annual increases, I believe at 20%. So if you protest your value to $100k this year, it can only go up to $120k next year.  They plan to run this for 3 years and could extend after that.  What this means: you can lower your tax burden by purchasing a distressed asset, protesting the value down, and then will not have to worry about it jumping 80%, 90%, 100% again the following year...should put a little more cash flow back in your pocket for a longer period of time.

    Andy

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  • Samuel DioufBusiness Member
    Real Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes
    2y

    Personally I invest in Columbus, OH. I believe there will be very high appreciation here as many large companies are investing money into our city such as Intel.

    [email protected]614-662-1652
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