Investing in Property (Plano, Murphy, Coppell, Denton) (apartment complex, leasing)

[nsumner]

I'd consider Little Elm as well, especially if it's zoned to Frisco ISD. However the homes under 200K go within a day or less.

Naima

[SAN_DAL]

Originally Posted by mSooner

Check out the HOA fees for this complex...I've heard they are very high. That being said, they rent FAST. There is one on the market right now for $122k

New forum member here, long time lurker.

I recently bought a 2BD/1.5BA condo at Meadowridge, and the HOA fees are average for the DFW area ($188/month). Taking into account the fact that these condos were built 30 years ago, I think they're in decent condition. However, I completely agree that they are in need of a face lift. Resale value will take a hit if they do not receive cosmetic attention in the next 5-10 years, and the friendly, quiet owners/tenants that reside there now will move on.

While we don't have many amenities (we do have a pool though! ), people tend to forget what the HOA fee includes (true for most condo associations):

Exterior maintenance
Sewer/Water
Trash
Dwelling insurance coverage

I estimated the total cost of these 4 items to be about $120-$150 per month for a similarly sized 2 bedroom SFH. So in essence, we are paying about $40/month for a pool.

To the OP: I own multiple rental properties, and while condos generally don't have the same cash flow opportunities as SFHs, they are good "gateway" investment properties. What I mean by this is you pay an HOA to take care of a lot of things that you as the owner would be responsible for with a SFH. You don't have to worry about a tenant not keeping up the yardwork, replacing siding/roofing, etc. You are also looking at a much lower purchase price than a SFH (granted, condos generally don't appreciate at the same rate as SFH, either).

Also remember that lending is still pretty tight right now, and you will most likely need 40% down to secure a mortgage for a rental property (20% bare minimum), and the interest rate will not be as low as a primary residence, either. Furthermore, your current mortgage will count in your debt to income ratio, so unless you have a significant amount of cash available, you will be hard pressed to qualify for a loan.

[GripeWater]

I would stick with single family homes feeding to PISD or Coppell ISD with easy access to highways & amenities, for better prospects of renting out, getting decent tenants and resale. East Richardson's 75082 feeding to PISD is a hidden gem which meets your requirements as well.

[MovingtoDFW]

I am yet to buy my primary residence, but have read much and considered buying rental units in the future as a means to diversify investments.

All good points made here regarding knowing your area & tenants well.

I was wondering what rental property owners here think about using property management companies to do that work if one does not have the time (or even knowledge / inclination) to manage properties? Do they cost so much so as to make the entire endeavor pointless?

Thanks!

[GripeWater]

Originally Posted by MovingtoDFW

I am yet to buy my primary residence, but have read much and considered buying rental units in the future as a means to diversify investments.

All good points made here regarding knowing your area & tenants well.

I was wondering what rental property owners here think about using property management companies to do that work if one does not have the time (or even knowledge / inclination) to manage properties? Do they cost so much so as to make the entire endeavor pointless?

Thanks!

There are good, bad and horrible property managers out there. Their avreage charge is one month's rent to advertise property, find/screen tenants and 10% of monthly rent to manage property/collect rent. I like mine, they are worth it. Both of us are working full time and don't want extra hassel in life but we did it in past and wouldn't mind doing it ourselves after retirement or if one of us felt like quiting job and taking a break.

[dgz]

I've owned and managed a few rental properties--and my house is in Murphy. I think that larger homes like ones you find mostly in places like Murphy and Coppell would be a high maintenance hassle. My best returns came from small properties (especially duplexes) that had one hvac per housing unit, a small easy-to-maintain yard, and averaging 1200 -1400 square feet. When I contrast this to where I live in Murphy where every house seems to have: 2 hvac systems, a 1/4 to 1/2 acre yard (which means a fence with a lot of perimeter to maintain and a large lawn to mow), and then the HOA fees (and the pickyness of the HOA (at least ours is)... I don't think you're going to see that much of a return. If you're thinking 'investment property' then you want to pay as little as possible and you want to get something that takes very little to maintain. Also, consider that often when a renter moves out, you may need to repaint the walls--regardless of whether the renter has been there just one year or five.

[SAN_DAL]

Originally Posted by MovingtoDFW

I am yet to buy my primary residence, but have read much and considered buying rental units in the future as a means to diversify investments.

All good points made here regarding knowing your area & tenants well.

I was wondering what rental property owners here think about using property management companies to do that work if one does not have the time (or even knowledge / inclination) to manage properties? Do they cost so much so as to make the entire endeavor pointless?

Thanks!

I would highly recommend a property manager when you are starting out. Hire a good one and learn the game inside and out. Then after a few years, you may feel comfortable enough to do it on your own.

As has already been said, a good property manager will charge 8-10% gross rent each month, plus a "brokerage fee" to locate/screen/move in your tenant. I've seen anywhere from a $250 flat fee for this service up to half a month's rent. A full month's rent sounds excessive.

It will cut into your cash flow, but in my opinion is well worth it. It is also considered a deductible business expense, which offsets some of the cost.

[Squirl]

Originally Posted by dgz

I've owned and managed a few rental properties--and my house is in Murphy. I think that larger homes like ones you find mostly in places like Murphy and Coppell would be a high maintenance hassle. My best returns came from small properties (especially duplexes) that had one hvac per housing unit, a small easy-to-maintain yard, and averaging 1200 -1400 square feet. When I contrast this to where I live in Murphy where every house seems to have: 2 hvac systems, a 1/4 to 1/2 acre yard (which means a fence with a lot of perimeter to maintain and a large lawn to mow), and then the HOA fees (and the pickyness of the HOA (at least ours is)... I don't think you're going to see that much of a return. If you're thinking 'investment property' then you want to pay as little as possible and you want to get something that takes very little to maintain. Also, consider that often when a renter moves out, you may need to repaint the walls--regardless of whether the renter has been there just one year or five.

Great advise! I prefer to rent to couples/singles without kids. Kids are destructive and there are more potential liability issues.

[Home Addict]

Is it possible if SAN_DAL and Gripewater can forward their PM contacts to me? I am having a horrible time with mine (a advertised house for 2 months before they tell me that I need to replace broken blinds and deep clean smelly carpets!).

Thank you in advance.

[ChristieP]

Originally Posted by Squirl

Great advise! I prefer to rent to couples/singles without kids. Kids are destructive and there are more potential liability issues.

And unless your property is owner-occupied, that's a violation of Fair Housing laws...