Purchasing rental investment in Dallas? (Fort Worth, Plano: real estate, apartment complex, renters)

[eva01]

A relative is planning on moving to Dallas as the cost of living is so much better there.

After looking through a lot of the property searches, it looks like it would make sense to purchase property for a rental investment. I'm aware of the taxes, but looking at the numbers it seems like with 20% down payment, there should be positive cash flow. There seems to be plenty of cushion even after that for vacancy, repairs, insurance, etc. In other metro areas, trying to purchase investments for rental you're always running negative until you get into very large buildings.

So, I'm guessing there's something I'm missing right? Are the laws unfavorable for landlords? Is the rental market having problems (high vacancies?) Other expenses I'm not factoring?

Does anyone else on here rent out property for long term investment?

[lh_newbie]

I do not rent, but have looked at it several times in the past.

DFW is quite landlord friendly, as long as you live in TX (not great for absentee landlords). With the credit crunch, first time buyers are having a harder time getting loans, which should decrease vacancy rates.

I personally haven't found a property that I felt a 20% down payment would turn a positive cash flow, so I've stayed away from rental property and have been investing elsewhere, but I know there are several folks on this board that own several rental properties. I'm sure they will speak up when they see this post.

Brian

[cdelena]

It depends upon the specific area, but it is much easier to have negative cash flow than positive in the DFW rental market. The large inventory of properties and the high tax and insurance rates make it closer than it might appear... I'd look at that cushion a little harder.

[eva01]

Thanks. I was aware of the tax rates but not the high insurance, I was basing insurance on a home in IL which is pretty reasonable. What is typical for yearly insurance on a $150-$200k home in the DFW area?

Any opinions on SFR vs. Multi family (4+) buildings? I'm more concerned with cash flow vs. appreciation.

I'll try to come up with some more questions, I feel like there must be some other factors I'm not thinking of? It's good to hear TX is landlord friendly, I'll do some reading on the eviction laws.

[loves2read]

depends on age of house, location of house (town) and what type of roof, wiring--almost need to have a house and probably get several estimates about insurance--If it is a rental property, I bet but don't know for sure that you will pay a higher premium since you won't be living in it as primary residence..

[Don2007]

Too much vacancy. The Dallas-Fort Worth area and surrounding metroplex has a glut of apartments offering free rent, no deposits, etc etc etc. Seems like apartment complex building has slowed but it was crazy during the past few years. If you plan to rent out a condo you had better be in a position to rent cheaply or have enough cash to let it sit vacant for months in between tenants.

[momof2dfw]

Some area cities in the Dallas metroplex are not THAT "landlord friendly". MANY have codes on the books that rental properties must adhere to but owner occupied homes do not. Some have also added laws that allow the city code to inspect the rental property INSIDE AND OUTSIDE! I for one am glad as I've seen WAY too many properties become neglected by out of state investors/landlords. Below are some links to what one city requires of single family rentals:

Single Family Rental Program - City of Garland

http://www.ci.garland.tx.us/NR/rdonlyres/1FFCA604-27AF-4CCC-B1A8-19A75F571786/0/ord6127.pdf (broken link)

As for multi-family dwellings I do know the City of Garland has taken possession of several from out of state investors and condemned them. It is not looked upon very favorbly.

If it were me and my own experiences w/ rental properties and what others I know have experienced I would NOT own rental property that was not close by for my own personal inspection. Many of the people I know that have many rental properties have sold them off as they become vacant.

[Lakewooder]

More renters are filling up apartments | Dallas Morning News | News for Dallas, Texas | Business: Real Estate

[DallasDreamer]

I don't know about other types of properties and areas, but I know that many of the rental houses we saw in mid-August in the $1050-$1300 rent range in Richardson and Plano are still up for rent. Landlords/agents have even called us to solicit ideas on why we chose not to rent their perfectly good (and sometimes very nice) homes. So I know some landlords are feeling a major crunch right now. And, yes, there seem to be so many multi-family units with "free rent" and other perks advertised.

[Lakewooder]

I only have single family homes plus a duplex. The last time I put up a lease sign in August I was absolutely bombarded (4-5 calls and 6-7 emails per day). I rented it to the second couple to see it (and went up $300). I've also had several people just asking since they know I have properties - I've gotten probably a dozen pms here and on another forum. Maybe it's just my part of town since there are fewer units these days due to teardowns.