All Forum Posts by: Andrew Herrig

@Young Nguyen I currently have 8 units in DFW that I self manage. If you have good tenants, it is not much work at all. If you have a bad tenant, they can make your life a lot more complicated.

Property management is not steady work. I find that I don't even think about my rentals for long stretches of time, but then if a maintenance issue comes up I have to be ready to jump on it quickly and get it resolved. I am also in the process of turning over 2 units at the same time, which can also take a lot of time. I would say I average 10-15 hours per month managing my properties, but it comes in waves.

As for finding a 2-4 unit in DFW, I have found that in general they do not cash flow as well as single family. Not a lot of 2-4 units were built in this area, and most of the ones that exist were built 75+ years ago. There are deals out there, but few and far between. Just depends on what your cash flow goals are.

@Dev Khosla As others have mentioned, an investment property in the $400k+ range doesn't make much sense in Dallas unless it is a multifamily. You could buy yourself a pretty nice house for $300k in the northern suburbs AND pick up a solid rental property for $100-150k. 

I don't see a 20-30% decline in values anytime soon (didn't even hit that in the 2008 crash), but I think prices will have to level off soon as median buyers start to get priced out of the market with interest rates and property taxes continuing to increase. 

@James Krahula Welcome to BP! House hacking is a great way to get started. I didn't end up going that route, but we did recently move and kept our old condo to rent out. Been doing this for 4 years now and have 8 rental properties. Dallas is a great place to invest locally if you understand the market (and account for our ridiculous property taxes). 

@Rodney Marcantel Nice flip! How did you find the deal? That seems to be the most difficult part in DFW these days.

My personal finances would certainly prefer an income tax of 5-10% over our current property taxes. Between my 8 rentals I am paying around $30k per year in taxes. If I was taxed on the cash flow I would certainly pay far less.

There is of course a trade-off. I think part of what keeps real estate affordable is our astronomical property taxes. Without that property values may rise faster than they have been.

I think the real issue the last 2-3 years is that tax assessed value was kept artificially low during the recession, and did not reflect market value. 2-3 years ago, after appreciation had already started to take off, there was a shift in philosophy to raise the tax assessments to market. So you had the double whammy of rising real property value and tax assessments being brought up from below-market value.

In my mind, the question is, what is the government doing with this windfall of revenue? I haven't seen much benefit from my doubling of property taxes over the last 3 years...

@Jack Smith I think the fundamentals of DFW are solid (population/job growth). I don't expect the kind of appreciation we have seen the last 3-4 years, but I also don't see a crash. Affordable (i.e. median and below) housing is severely underbuilt so there is a large base of renters that can't afford to own a home without moving far outside the city.

That said, finding properties that cash flow AND are in decent neighborhoods is getting difficult. Property taxes are killer in Texas. In the last year or two, the rents on my properties have not kept pace with the increased assessments, let alone any other costs going up. Almost 20-30% of the rent just goes to pay the tax bill.

@Bart H. I do it myself, but there are a lot of good firms out there. 

You can go in to talk to someone informally before the actually hearing, that's what I usually do.

If you bought the house on MLS, you can just take the HUD in and they will immediately change the tax value to the purchase price. If you bought it off market they generally will not accept the HUD as evidence (in my experience).

@Greg H. Yes, they raised it the most the year I bought it (2016), so there's nothing I can do about that. But 2017 will be capped.

I guess the question is, if you sold your house today, would you get at least the tax value or more for it? If so, you might not like the tax increase, but it is probably fair. Not that I wouldn't protest it anyway...

@Joseph Weisenbloom Not sure about your area, but in Dallas County, they aren't targeting anyone in particular, they have just been extremely aggressive in raising the assessments to market value over the last 2-3 years. My primary residence has jumped almost 60% in two years. Several of my rental properties have close to doubled.

I always protest my taxes. Sometimes I can get a reduction, sometimes I can't. To be fair, the tax values (at least in Dallas) were way under-market during the recession. So not only are they playing catch up from that, we have also seen a lot of appreciation, and the new policy seems to be they want to capture every penny of it.