Is Plano texas still a good place to invest?

Question

Looking at the number of rentals available in the market, looks like there rental market isn't very strong?  How easy is it to rent out a SFH in Plano area? Also the numbers don't look very nice. Buy a SFH for around 400k-550K  and rent it for like 2.5-3K?

Diego A. · Answer

Plano is having some growth issue as reported by Plano ISD with the decline of enrollment. That could be determined by numerous factors which I haven't seen a study yet as this was reported Monday.

Anyways when you try to have a property for LTR in cities with school rating higher than 7, the economic doesn't work. Schools are one of the factors that drives quality and rise prices. At this moment there are cities that are having an 8% growth and prices are starting to go up

On the other hand there are cities in good neighborhoods but without great schools that had house prices going down.

Market depends on where you are standing and what strategies works better for you.

Taz Zettergren · Answer

@Karan Shah The rental market is actually quite strong in Plano it's just challenging to make the numbers pencil because there's so much demand from the owner occupant side. Prices are so high and rents haven't kept up as well so if you're leveraging I'd be prepared to put down 35-40%. There are several other suburbs east, south and west that are benefiting from everything the metroplex has to offer at a much easier entry point where rents keep up much better.

Feel free to reach out with any questions. Best of luck

Joe Funari · Answer

@Karan Shah Plano is definitely in high demand. But If you looking for a long term SFR rental (3/2/2) you will have to spend anywhere from +$350K to find a move in ready rental in Plano. I recommend to my fellow investor clients many other areas in the Dallas/Ft. Worth area where you can easily find move in ready 3/2/2 homes for less than $300K with strong rents and low days on market. I will be happy to help you with your search. Just let me know.

Corby Goade · Answer

There is no "right way" to invest or good or bad markets. Everything is a balance of risk and reward.

I know nothing about Plano, but I can tell you that less desirable areas will have cheaper properties, higher vacancy, lower appreciation, lower quality tenants and better cash flow.

More desirable areas will have more expensive properties, lower cash flow, lower vacancy, higher quality tenants and better appreciation. Usually cash flow comes with these markets over time.

You can make money either way, just in DIFFERENT ways and on different time lines.

If you know what you are getting in to and understant the risks and rewards, you can invest anywhere.

Bruce Lynn · Answer

Plano is probably a better place to live vs buying rentals.

This is where all the corporate relocations used to go about 25 years ago or more.

Now most of those seem to move to Frisco and Proper.

About five months ago I looked and in Frisco, Plano, McKinney, there were over 1000 homes for rent.  That's too many.  Look north from Hwy 380 all the way to Denison.  That's where I expect the hot growth to be over the next 10-20 years.

Brian Adams · Answer

The screenshot you posted does not show a particularly soft market by itself.

If you turn the display to the Satellite display, those many hundreds of purple dots are spread out amongst literally 100,000s of homes in the area. That entire area is basically pure residential housing.

Zillow is perhaps one of the better gauges of rental market temperature because many PMs don't use the MLS to advertise rentals. Zillow shows the rental market is warm and rental prices are up versus the same time a year ago.

https://www.zillow.com/rental-manager/market-trends/plano-tx...

April Rae · Answer

Plano, Texas has been a popular investment destination due to its strong economy, good schools, and growing population. However, it's important to assess current market conditions before making any investment decisions. Here are some insight you could consider:

**1. Rental Demand:
While Plano has traditionally been a strong rental market, recent data might indicate some softening. However, this can be a temporary fluctuation. It’s crucial to analyze local trends, such as population growth, employment rates, and new developments, which can impact rental demand. Plano is part of the Dallas-Fort Worth metroplex, which has seen steady growth, suggesting potential long-term stability.

**2. Rent-to-Price Ratio:
Your observation about the rent-to-price ratio is valid. Buying a single-family home (SFH) for $400k-$550k and renting it out for $2.5k-$3k results in a relatively low rent-to-price ratio. This can make it challenging to achieve strong cash flow. Ideally, investors look for properties with a rent-to-price ratio of at least 1% (e.g., $300k property renting for $3k/month) to ensure better cash flow.

**3. Property Appreciation:
One of Plano’s advantages has been property appreciation. Historically, property values in Plano have appreciated well, which can offset lower cash flow in the short term. Consider whether you are looking for immediate cash flow or long-term appreciation. If the latter, Plano might still be a good bet.

**4. Tenant Quality:
Plano attracts a higher-income demographic due to its good schools and proximity to corporate headquarters. This can mean more reliable tenants who are willing to pay higher rents and take better care of the property.

**5. Alternative Markets:
If cash flow is your primary goal, consider looking at nearby markets with lower property prices and higher rent-to-price ratios. Cities within the DFW metroplex like Garland, Mesquite, or even further out like Fort Worth might offer better cash flow opportunities.

**6. Due Diligence:
Conduct thorough due diligence. Check local rental listings to get a realistic sense of rental rates and vacancy rates. Tools like Rentometer and Zillow can help. Also, network with local real estate agents and property managers to get their insights on the market dynamics.

**7. Investment Strategy:
Your investment strategy should align with the market conditions. If you find Plano’s current market conditions don’t meet your cash flow requirements, consider looking for properties that need minor rehabs. Adding value through improvements can increase both rent and property value.

In summary, while Plano has many attractive features for real estate investors, current market conditions suggest careful consideration is needed, especially regarding cash flow. Balancing your investment strategy between cash flow and appreciation, and possibly expanding your search to nearby markets, can help you make a more informed decision.

Good luck with your investment journey!

Is Plano texas still a good place to invest?

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