Starting out with a 1-4 multifamily property in DFW

[Michael K.]

Hello BP community members, I'm a long-time BP lurker having browsed the discussion forums numerous times in the past but finally decided to sign up and join the community as a small step towards RE investment action. I relocated from the south Texas McAllen/Rio Grande Valley area, where 4plexes are abundant, back up to DFW within the last year. I have never owned a property so my initial strategy for breaking into the RE investing world was to go the 1-4 multifamily owner-occupied FHA route as my initial investment, using my one FHA "silver bullet". My question is whether that is a viable strategy in the DFW area given how hot the market is here and the seemingly uncommon nature of 1-4 multifamily properties? In the south Texas/ Rio Grande Valley area fourplexes are extremely common with entire subdivisions being comprised solely of fourplexes rather than large apartment complexes and the builders there keep on building them. Here in DFW these properties seem few and far between. The other issue in regards to the viability of the owner occupied 1-4 multifamily strategy are the skyrocketing property prices here in the DFW market which leads me to wonder if the numbers on such a property, if one were to turn up, would even make sense? Would a 1-4 multifamily property with good income metrics be a decently nice one to live in? I appreciate any insights on this or getting started with investing in the DFW market in general. Kind regards, Mike K.

[Jim Cummings]

@Michael K.. I'm certainly not an Expert on the DFW Market - however there are some basic things you can do to enhance your chances of acquiring a 2-4 Multi-Family property. These are:

1. Get PRE-APPROVED for a loan, NOT just Pre-Qualified, so you'll know you can buy a property, and how much money the lender is willing to loan based on your credit, income, etc.  

2. Educate your self on the market. Know where properties similar to what you are interested in acquiring are located. What is the Sales history - typical Selling Price, Days On Market, How many were For Sale over last 6 months, last 12 months.  What are typical rents for these properties. Create an Excel Spreadsheet of these facts. Just the process of documenting these facts will help solidify the info for you.  

3. Find yourself a REALTOR you feel comfortable with. Someone that will assist you with your quest. Notice, I said someone you are comfortable with, that is patient, works on your time frame, and someone you feel is not just out to make a quick commission.  If you don't have an Agent, or need assistance in finding an agent, I can refer you to agents I've worked with before in the DFW area.  

3. Armed with this info, wait for a property to come on the market in your target area. And when it does, DON'T PROCRASTINATE about making an offer. If you are not aware, in Texas, we use an Option Contract. so you have an easy out if you find something during the Due Diligence (Option Period) that might be surprising.  

4. If you want to be more aggressive in your search, find the names and addresses of property owners, and send them a letter asking if they are interested in selling.  

Good luck, Be patient, and happy investing.