Investment Property in Plano or Frisco - Need Your Advice

[jimithing78]

Pretty good info in here. I agree with Lakewooder's above statement. Close to a college might provide a steady stream of occupants but it also means a high turnover. They rent for a year or two and then they're gone. Every time one tenant moves out you've potentially got to put money back into the house to make it move in ready again. Plus with college students you've got to worry about normal college behavior that causes more wear on the house. You'll be replacing the carpet and painting a lot. They're just usually mature enough yet that I would want a bunch of them living in my house.

Just pick a nice middle of the road type place in a decent, low crime area and you should be fine. Do you live in DFW? I'd try to find a place within a reasonable drive from your house so you can go by and check on things from time to time and you might also be able to do some of the smaller maintenance items yourself.

[edweber]

As with all things in life, it seems that owning a rental home near college has its positives and negatives. To nsumner's point about older homes being hard to maintain... well, I think just about every house around UTD campus would be considered "old" (except for the new construction closer to coit, of course). So this is yet another factor why I'm still leaning more toward the newer homes in frisco or plano.

Speaking of maintenance on a rental property... I wonder what is the typical way of handing this. Do most landlords buy a home warranty (how much do they cost anyway)? As a small time landlord (just 1 or 2 properties), would you go mow the lawn yourself or hire someone to do it?

I thought about doing most of small maintenance myself. But I'm not sure how feasible this would be since I work out of town a lot, and many weeks I'm away most of the week. I've been thinking about just hiring a property management company to handle everything. This way I don't have to worry about little things that come up. I can focus on my day job and make more money, so I can buy more rental properties. Anyone else in this camp? Would appreciate your input on a good local property mgmt company and how much they charge.

[nsumner]

Originally Posted by edweber

Speaking of maintenance on a rental property... I wonder what is the typical way of handing this. Do most landlords buy a home warranty (how much do they cost anyway)? As a small time landlord (just 1 or 2 properties), would you go mow the lawn yourself or hire someone to do it?

I thought about doing most of small maintenance myself. But I'm not sure how feasible this would be since I work out of town a lot, and many weeks I'm away most of the week. I've been thinking about just hiring a property management company to handle everything. This way I don't have to worry about little things that come up. I can focus on my day job and make more money, so I can buy more rental properties. Anyone else in this camp? Would appreciate your input on a good local property mgmt company and how much they charge.

A home warranty would run you about $350-$450 a year if you include washer/dryer/refr. Your deductible per visit aout $70. I have it on all my properties and those we manage. It's a no brainer.

Typically tenants are responsible for the lawn but that can be negotiated for a slighly higher rent. It would be a PITA to do this yourself unless you live next door. If you are totally new at this, I highly recommend hiring a property mangement company. Typical cost and services of PMC is about 10% of monthly rent but if more properties are managed for the same owner, the % goes down.

Naima

[FarNorthDallas]

I've heard from a couple of folks that the rental market in Frisco ISD is doing quite well right now.

I was chatting to a house renter in Plano the other day. She was renting a 3/2 house for $1200 in Central Plano. She is self-employed and her income dropped. She went to her landlord a few months ago to tell her she was having financial trouble. The landlord has 3 properties and the other 2 did not have tenants. The landlord dropped her rent to $900 to keep someone in the house so they wouldn't have 3 empty rentals. Just this week the landlord rented out the other 2 properties. The renter says she will only be able to stay in the house at renewal in April if the landlord keeps the rent at $900 as her income still has not turned around. Who knows if the landlord will agree to that.

You'd also want to factor in property taxes, too.

[TurtleCreek80]

A 10% property management fee just eats into any profit you are hoping to make.

Are you paying cash for this investment property or will you be taking out a mortgage? That changes things, but your end goal has to be to have the biggest cash flow possible.

My point about property near colleges being in demand is that every 2-6 year cycle, about 20,000 people will need housing near UTD. That is basically recession proof- whereas you could be caught in the situation of being FarNorthDallas' friend's landlord with two empty properties and being backed into a corner and forced to drop rent on your 3rd property by $3600/year.

UTD has a huge graduate school population (older) as well as international student population (stereotypically not known for being party animals)- I don't think you would ever have a problem finding tenants for a property within walking/biking distance of campus and with shorter term tenants (1-2 hrs max), it's easier to move rental rates up as the market rebounds.

[edweber]

Naima - thanks for the info on home warranty and PMC cost. I'm a newbie at this, so I'm thinking I should go with a property mgmt co as you suggested.

But to TurtleCreek's point... I think I will need to weigh the cost for a PMC. I do plan to have a mortgage on the rental property, so this adds interest cost. But I'm hoping I could find a really good deal given the current market. I figure if I pay less for the property, then I will have more wiggle room when it comes to maint cost, etc. I've been looking at REOs pretty regularly.. but boy, I have to say many of these REOs are not exactly priced below market.

I actually haven't thought of TurtleCreek's point on 'shorter term tenants makes it easier to move rental rates up'. This makes sense. But then again, the houses around UTD are so old that you probably end up spending a lot more on maintenance.

[vipdfw]

You will probably get more in Plano than Frisco. Plano is closer to Dallas and usually will bring a higher rent value. You will however get more home in Frisco, so you need to decide do you want to list and rent quicky or do you want more home and less rent back.

[S. M. Choudhry]

The replies were very informative and useful for investors in houses.

[omra]

So did you buy a property? If so where did you buy it and how is it going so far?

[aggie972]

Originally Posted by TurtleCreek80

A 10% property management fee just eats into any profit you are hoping to make.

Are you paying cash for this investment property or will you be taking out a mortgage? That changes things, but your end goal has to be to have the biggest cash flow possible.

My point about property near colleges being in demand is that every 2-6 year cycle, about 20,000 people will need housing near UTD. That is basically recession proof- whereas you could be caught in the situation of being FarNorthDallas' friend's landlord with two empty properties and being backed into a corner and forced to drop rent on your 3rd property by $3600/year.

UTD has a huge graduate school population (older) as well as international student population (stereotypically not known for being party animals)- I don't think you would ever have a problem finding tenants for a property within walking/biking distance of campus and with shorter term tenants (1-2 hrs max), it's easier to move rental rates up as the market rebounds.

An international student that isn't a big partier does sound like a very good tenant situation. Do any landlords on this board facebook stalk their applicants to look for things like hard partying and lack of conscientiousness?