DFW Condo or Duplex for a beginner?

Question

Hi there BP community!

I'm a new investor in the DFW area currently saving capital from my W-2 for my first purchase. I want my first purchase to be close so that I can self-manage and gain as much knowledge as I can (profit would obviously be icing on the cake). My question to you all (especially those of you with experience in the DFW area) is where I should start?

I often see condos on the north side of Dallas that could cash flow decently and get me in the game at a low price point, but I have read many times about the dreaded HOA's that can ruin investments. I would love to hear some first hand experiences with the condo market in Dallas (good or bad) if you have any.

My other option is to house-hack a duplex. However, the supply seems very low in the area and I would need to save for quite a bit longer just to end up paying out of pocket still for a small part of the mortgage. Also, the only duplexes I can find on the Dallas side that are in a safe neighborhood would be those in Arlington, once again resulting in even smaller supply to choose from.

Any advice towards either of these strategies would be very much appreciated.

Thanks in advance,

Thomas

Kenneth McKeown · Answer

@Thomas Ross Duplex. Duplex. Duplex and again duplex. I hate condos though - so that's just me.

Condo you'd have no ROI versus a duplex you can rent out the other side.

Condo's don't appreciate worth anything (not that MFH do as well as SFH - but way better than condos).

Condo's have HOAs - which I hate. You don't have full control over your property.

Condo's are also the bottom tier (IMO) tenants - unless you're talking about an upscale condo which will have an astronomical HOA (I just sold one for a non-investor where HOA was $750/mo).

I house-hacked a duplex to start and it was a great way to get the ball rolling.

Bart H. · Answer

IMO go with a duplex.  Over time it will go up in value.  Condos really wont go up in price.  My first property in Dallas was a condo, it just never went up in value, and I regret having not bought a duplex instead.

Since then my wife and I started with a house hack duplex and did very well.

Valerie Watson · Answer

Hello local investors.  I'm new to the area as well and am also looking for MFP or SF homes to invest in to keep/hold.  I'm in-between newbie and investor as I've house-hacked and sold two properties to create the capital to move on to successive investments. I'm looking in the Corinth south to Lewisville/Carrollton/The Colony/Hebron/Plano/Allen areas as the homes are older and the property taxes are held at about 2.25% (ish).  I would even be interested in the area north of the 380 except the traffic from there to get down into Dallas is horrific. There are also several duplex areas that would be C to B type tenants. It would also be easier to house-hack in that area as there is access to multiple services and venues.  I haven't found anything yet but, I am working diligently to learn more about the area, meet new people and help out where I can.

~Valerie

Kenneth McKeown · Answer

@Bart H. nope but it was on Live Oak and it was upgraded much more than 5720 (just looked). It sits next to two vacant duplexes that are ghost towns. They need to be tore down or remodeled badly. Totally understand though - taxes downtown are crazy high. This was a long term buy and hold for a client that wanted to be close to that location so it served their purpose. My taxes just went up so much on my east Plano duplex but I'm still going to hold. What it would cost to purchase another duplex like that would kill me - so most of my purchases will be longggg term holds.

Kenneth McKeown · Answer

@Bart H. I sold one off Live Oak for 475k this year - Should of kept it!! lol

Dylan Barnard · Answer

Yes, listen to @Kenneth McKeown. Condos have a drag on cash flow in the form of an HOA (most of the time), and inhibiting your cash flow is rarely a good thing when it comes to an investment. I do see condos in the right locations as being potentially good performing investments, but only if you are using it as a vacation rental. However, with vacation rentals there are very high turnover costs. And let's face it: no one is saying "let's travel to DFW for a nice vacation". I love living here, but I would tell someone to come here with their family for a week in the summer.

Valerie Watson · Answer

Kenneth, I would house-hack if the correct opportunity arose.  I'm actually open to either scenario at this point.  Finding a cash purchase Auction property that I could BRRRR would be my preference.  I would live in it while the renovations were taking place if it was habitable. Then, I would repeat the process.  I'm not afraid of a little dust.

~Valerie

Kenneth McKeown · Answer

@Valerie Watson are you looking to house hack again or simply just invest? Owner occupying any property will provide a much better interest rate which will help with long term cash flow and require very little down. However if outright investing is the plan you're definitely on the right path in regards to where you should be looking at.

Bart H. · Answer

Ouch, better not have been 5720 Live oak!!!....yeah maybe I should have held onto it.  It was in about the best condition of any of the ones in that area.  (we looked at 20 or more of them over a 3-4 year period.)  When I talk about an area, there was a point in time where we knew that little area along Live Lak/Ross and over a little into SKillman as well or better than anyone.  We would look at every one of them that came on the market.

A lot of them got bulldozed and were replaced with condos, and those folks could pay more than we could/would.  And I havent seen mant duplex's coming up in that area any more.

Honestly I am glad we sold it.  It gave us some capital that let us do a couple of other things in terms of rehabs, and thats made us a LOT better investors imo. Plus taxes were going up a lot faster than rents.  Our margin got cut in half due to increases in property taxes.

Bart H. · Answer

We had a duplex on Live Oak, right near Skillman.  It was a great location, bought it in 2013 over asking for 280, sold at 370, I think we brought 20K to the table. (or close to there), in 2016.  And we lived there a year, and leased it out the remaining time.

Its a great area, perfect for a house hack, I dont know that it will still cash flow, as a lot of them in the area were torn down for condos.

If its your first property, first time as a landlord, getting something that has an ok return is perfectly fine if you are going to house hack it for a couple of years.  Its your starter property, learn the ropes etc.

DFW Condo or Duplex for a beginner?

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