Plano/Frisco. Buy Vs Rent

[BayTexan]

You can't have everything

New construction is good, but as you stated, when the market dips, and if you have bought something in the boondocks, then you can never compete with the builder if you have to sell. Plus they don't have trees, landscaping, window treatments and builders charge an arm and a leg for upgrades (which almost anything nice is). And then in places like Frisco, you will be faced with the constant rezoning of schools as they keep building new schools to keep up with population influx (plus they have a small school model so they keep building schools). And new homes usually have very small lots and are packed in like sardines (you can hear your neighbor using the toilet - no exaggeration - have seen this in several friends houses in Frisco). And construction quality during booms is notoriously suspect as they stack them up. Plus these homes have not experienced the growing pains including foundation issues.

10-15 years old is not old in most parts of the country. And depending on the builder, these can be quality builds with good spacing between homes and decent size lots. You can easily find many lots of 0.25 acres or more in Plano than in newer builds in Frisco etc. Many are also upgraded (though some of them maybe crappy upgrade jobs). I have a 18 year old home in Plano with 0.3 acres including a pool and a great size grassy area with beautiful landscaping and mature trees. The whole neighborhood is also green with an awesome greenbelt and parks. The schools are also mature and well settled with no threat of rezoning. Look at zipcodes 75025 and 75024 where for your price range (450-550), you can find several nice homes with great yards and schools. Will send you a DM with some examples. And they can command these prices because unlike cars, there is a premium for good homes in established neighborhoods which are built out (Plano is mostly built out and the land value should keep appreciating moving forward).

Originally Posted by adamflath

Great post as we are in almost exact position. One thing we have noticed is that the nicer looking homes in the $450k-$550k price range are getting multiple offers. One house we eyed had 12 offers and final one was over 20% over asking and all cash! It is nuts out there. It must be east and west coasters selling their houses and moving to dallas?

We will check out a couple rentals, but most rental single family homes in the $3-4k range are very dated and have no character.

North Dallas has some decent older homes, but majority seem to have poor schooling options.
Plano and Frisco have the great schools, but the homes are unnecessarily large, have no yard besides a pool and lack trees. Then you have some other properties in Plano/Frisco that are 10-15 years old, yet are commanding 90% of a new build price down the road. When you factor in the depreciation of everything in the house, it makes it almost a no brainer to buy new construction. But then you see the construction and think to yourself how fast this can look like 2007-2009 with half built houses as your neighbor.

[angelofdarkside]

I appreciate everyone who replied and shared their insight. I have my eye on houses in 75093 and 75024 and will be buying hopefully next year. For now, I am still leaning towards renting like all of suggested. Thanks

[MinesotaUser1]

Originally Posted by Katana49

I'll buck the trend here and say you should buy.

In a normal market, with your situation I used to agree with the other posters, that you should rent first, and then see where you want to land, but considering the area you will be looking in, it doesn't make sense. The pace of home sales is still very much ahead of historical levels and people are still losing out on homes even when making offers over list price, which was unheard of here until just the last few years. The simple fact is that the homes in the DFW area are still a good value compared to homes in similar sized metropolitan areas that can offer the same mix of job opportunities, shopping, dining, amenities, etc. It's not nearly the bargain it was 5 or 10 years ago, but it is definitely still a bargain IMO.

Home prices will probably still appreciate by 5% or so next year. That will cover your closing costs if you decide to sell and you won't be out much money, if any. Worst case scenario is that you buy and live there for 2 years, sell and pocket some money and you won't have missed out on any equity gains during that time, nor thrown any money away on rent.

I wouldn't buy new, if you decide to buy. You'll definitely lose money if you decide to sell in just a year or two. There are plenty of homes that are less than 10 years old that have been built in both Plano and Frisco that are still very much in style/updated. If you buy in a home zoned to Plano ISD, you should have absolutely no trouble selling.

I've lived in Plano, McKinney, and now Prosper for about 30 years now combined, and I just don't see a downside to purchasing in this area. I'll also note that if you do decide to buy, and then sell in a year or two, most agents here are no longer operating on the 3% commission if you also buy with them. The last two homes we've sold, our agent has settled for 1% commission to sell our home. It is that competitive here. So, the cost of selling your home wouldn't be as high as you might have anticipated, and it's just one more reason to buy rather than rent and lose out on any gain in equity.

I noticed different thing than you. I feel everything is overvalued now. More inventory and few buyers compared to last few years. We will see more depreciation in next few months as mortgage rates going up. I am seeing deals everywhere for new houses which was not there till last year.

Dont compare one metropolitan with other. Each one unique. SFO and NY has high population density place with very less empty spaces to build new houses. Dallas is not like that. If you drive 10 or 15 more mins from Plano/ Frisco , you will see all empty land. Frisco was nothing 5 years ago.

If house prices increased 5% every year from last few years, it does not mean it will happen same in the future years. My gut feels says there is good chance that prices may go down little.

[Katana49]

Originally Posted by MinesotaUser1

I noticed different thing than you. I feel everything is overvalued now. More inventory and few buyers compared to last few years. We will see more depreciation in next few months as mortgage rates going up. I am seeing deals everywhere for new houses which was not there till last year.

I gotta disagree.

Deals for new homes are more a sign that the builder got greedy. For example, there was a subdivision being built right next to my previous subdivision. The builder originally priced their homes as "starting from the $230's." But by the end of the next 3 years, it had increased to $300k. The lots hadn't gotten any bigger, and the base plan hadn't changed, but they thought they could charge 30% more for the same home. But the existing home market is far larger than the new home market, and prices are still steadily climbing. I don't think we're going to be seeing double digit gains like some areas have seen in some years, but I definitely think 3-5% is still going to be happening as long as we have a strong local economy.

As far as depreciation due to interest rates... personally I doubt it. My first mortgage was at 7%... which was a screaming good deal at the time, compared to rates my parents paid most of their lives. We still have a long way to go before we even get back to 7%.

[Taynxtlvl]

Rent first here I say. Or perhaps purchase a smaller home/condo/townhome that you can rent out easily and buy bigger once you assess the area.

[angelofdarkside]

Spoke with several different Realtors here. Is it a trend in Plano, Texas not to provide Home warranty on appliances to your renters?
Often washer dryer and sometimes even refrigerator is not included. Most do not have Home warranty on Appliances and the ones that have are saying they will not cover trade calls.
I have always provided these basic things in my previous houses that I had rented out in Florida and Texas. If an appliance did not work, renter would call the warranty company and I pay for the trade call (usually 75 dollars). I would be responsible for all the repairs on appliances. Have we been too generous or is it just the local trend?

[Bp25]

Originally Posted by angelofdarkside

Spoke with several different Realtors here. Is it a trend in Plano, Texas not to provide Home warranty on appliances to your renters?
Often washer dryer and sometimes even refrigerator is not included. Most do not have Home warranty on Appliances and the ones that have are saying they will not cover trade calls.
I have always provided these basic things in my previous houses that I had rented out in Florida and Texas. If an appliance did not work, renter would call the warranty company and I pay for the trade call (usually 75 dollars). I would be responsible for all the repairs on appliances. Have we been too generous or is it just the local trend?

It depends. Washer dryer and refrigerators are optional appliances in Texas rental homes. If landlord pays for the warranty yearly charge then renters usually bear the trade call cost. Otherwise the renters can potentially abuse the free trade call and keep calling for minor things.

With ever increasing property taxes and insurance, most landlords don't have much cash flow unless they paid cash or large down payment. So they try to minimize chances of unnecessary expenses.

[WorldKlas]

As a landlord, I’ve never had a home warranty on my rentals. When something is broken I have it fixed. Tenant contacts me, I arrange repair. Most of my rentals do come with fridge. One of my rentals also has a washer & dryer. In the future, I will stop providing the fridge because my tenants keep breaking the icemakers. Its not common to provide a washer and dryer, but I just happened to have a brand new set so I put it in a condo unit and all the tenants wanted it so haven’t pulled it out yet. Its about 4 years old now. Next time I will make it an option for the tenants but let them know its not going to be repaired if it breaks.

[rootbeerspin]

Rent! You can rent entire house under 2500.

I like Frisco and Mckinney a lot. Plano is a little pricier. I'm in process of taking over existing liquor shop/c-store in Plano area and we will rent for the first year or so and buy a house next year. Already spend over a year looking for business and don't want to rush buying a house.

[stan4]

You can get land for the "unnecessarily large house" in Plano if you buy older. Most newer construction (starting around the 1990s) plop homes right on top of each other.

Neighbors (and clan stan4) sitting on half acre+ lots in 75093. I could not stand being smack dab on my neighbors and wanted a back yard with a pool but also where people and dogs could actually run and play.