Inspiring Househacker Northeast Dallas

[Michael Akai]

Hello All,

I am an inspiring buy and hold investor in the Northeast Dallas area and I'm looking for some advice regarding the purchase of my first rental investment property.

A rough outline of my house hacking strategy is as follows.

• Purchase a duplex with a 3.5% FHA loan
•  Put a portion of my monthly savings each month to upgrading/modernizing my half of the duplex while renting the other half then move into the other half after a year or so and repeat.
• Once both halves of the duplex are repaired to the market standard of the higher renting comps in the area, either used the forced appreciation/equity to either take out a HELOC or do a cash-out refinance to fund my next venture.
  
•  Rinse and repeat.

I have been working with an REA for the last few months so that I could monitor the housing market in the collin county area via the MLS. I really like this area because of the job pull with company headquarters like State Farm and Texas Instruments, and because of the highly sought out public school districts in the area. But I've been coming across some consistent problems in my analysis of these properties and am hoping that someone experienced in this area could provide some insight.

1. Price to rent ratios rarely meet the 1% rule and Property Taxes and PMI's eat away at monthly cash flow, so have any of you found neighborhoods with favorable numbers in these categories?
2. MLS contains few Multifamily units (as expected when compared to the SFR market). Are there any wholesalers in the area who specialize in multifamily units that are willing to connect?
3. Branching off from my second point of there being a small multifamily market, I have been looking into ways to replicate this plan with a single-family unit where I stay for a year or so while upgrading the property to add value but the issues tight cashflow margins (assuming I rent out the property after a year) still persist as well as limited "Good deals" on the MLS.

I am open to any and all feedback, suggestions, and/or guidance regarding my current plan. 

Thanks for taking the time to read this!

[Kyle J. Cooper]

@Michael Akai 

I don't think you can go wrong with this strategy, especially in an expensive market. I'm in the same boat, but due to layoffs and COVID-19, it has pushed back my time table. I'm in Dallas County and I'm finding the same thing, you'll be lucky to find a true 1% property. But don't let that stop you in your tracks! You might have to get creative and choose to persevere amongst all the challenges. 

Based off your strategy with a Duplex, you'll almost always get higher rents by renting by the room. You could rent out one side as a full unit, then take on as many roommates in your own side to offset your mortgage. Just double check the rules in your area for renting out rooms to non-related tenants. If you're in a good area this will really help with filling those rooms. Location can make or break your investment(s). You might still have challenges cashflowing a lot after you move out, but while you're living there you should be able to live for free or at least close to living for free(this is an absolutely huge return in and of itself).

It's like Brandon Turner and David Greene always say it's better to invest and have a base hit, then to sit on the sidelines. They wont all be home runs especially starting out but you have all the wealth building benefits of real estate with loan paydown, tax benefits, appreciation. Sounds like you've done your due diligence and educated yourself, you're already 80% there, now's the time to move forward and hop in the game. 

Hope this helps!