Contractor · Rego Park, NY · Member since 2015 · 53 posts · 20 votes
My wife (business partner) and I are headed to DFW Texas to look at SFR's tomorrow.We are New Yorkers looking for an ideal buy and hold property. Very nervous!! Just wanted to know of any mistakes you guys might have made when shopping around for your first investment property. Any help would be greatly appreciated!
@Antonio Marte I had several mentors early on in my investing carrier who told me one the biggest mistake I could do as a newbie is invest too far from where i live. They said before i should consider properties out of state of even out of the county, I should build a small portfolio of properties not more than 30 minutes from my house so i can learn the basics. I still find this advise sound 15 years later.
How ever If you must invest out of state, i would say:
1, Do some basic homework in advance before you go. Check us census data for stable population growth for each zip code you are considering, i like to see at least 1% population gain both historic and forecast AND very important to check for crime infestation in the area, so you can to to here for that: https://www.crimereports.com/
2, don't trust your realtor's input on investing, rather maybe ask a round thee RE Investor clubs in DFW area to locate a reputable investor and pay them a reasonable consulting fee to give you a second opinion about area or even a particular property. (make sure they are not involved in the transaction in any way.)
Good Luck to You both and I hope it does work out!
The nausea is indeed a good sign...that you have brains. Realtor.com has most of the MLS listings and you can search by circling an area. If you select a house you can click on schools and get school ratings. Schools are important...they don't have to be top notch but they are a good indicator of the quality of the neighborhoods. My sister-in-law bought in Frisco in North Dallas and sold and bought again within a year as they had mistakenly bought in the wrong school district. Frisco is very nice.
Don't freak out too much about the foundation comments, but know renters rarely water the grass unless on sprinklers and never water the foundation. Foundations are engineered for the soils and Dallas has a newer housing stock...not saying don't be careful, just that typical movement probably causes cosmetic damage and will not render a property uninhabitable. But I have seen a foundation that could not be fixed, two huge cracks...totalled if you will. Bank foreclosure and it did sell.
So if you tile the floors of your new property, specify crack membrane so your tile floats.
You can't want to buy a rental and say cash flow is just a bonus. With that thinking you are going to over pay for sure.
Don't fall in love with any property. Don't "try" to make the numbers look better. They are what they are. Not being from the area you won't know the going rates for rehab. DON'T TRUST THE PM's. Half of them are scumbags.
I lived in Texas for a few years...I loved it. I have been bugging my wife about moving back for years but her family is in NJ/NY so I would probably have to move the whole family to get her to go back. Don't get emotional and stick to numbers. Run them again and again and...well, you get it. Numbers don't lie- eager real estate agents do.
My wife (business partner) and I are headed to DFW Texas to look at SFR's tomorrow.We are New Yorkers looking for an ideal buy and hold property. Very nervous!! Just wanted to know of any mistakes you guys might have made when shopping around for your first investment property. Any help would be greatly appreciated!
Hey Antonio. I hope your trip has been productive thus far (based on when you posted, I assume today is your second day in town). I'd love to meet if you have time while you are here in town. I'm not sure if you are looking for turn-key or something that needs some love, either way I should be able to help you out in the 8 days you are in town. Full disclosure, I represent a large-scale wholesaler here in Dallas. We specialize in helping investors, like yourself. Give me a call when you get a chance. 214-228-8637.
Good evening everyone thank you for all the advice. We met with a property manager today and got a good vibe. Will continue our search on properties now. Property manager gave us a few zip codes where we might be able to get 1% rent. Thanks again.
Glad to hear things are going well, @Antonio Marte. Would have loved to meet you during your trip, but as per our private conversation, unfortunately I'm currently in Brazil giving seminars to investors here.
Let me know if you want to run any ideas or zip codes by me or have questions.
About some of the comments regarding falling oil prices and the texas market...keep in mind that Texas is a huge state and has lots of sub-markets. DFW has less than 10% Energy related industries. San Antonio is 30% energy related, if I recall correctly. Austin is very diversified (although mostly IT) and won't really be affected much. Houston has 80% of offices leased by Energy related industries (according to a CBRE study) and it will be interesting to watch how the market will be affected in Houston.
Several small towns in west Texas will take a big hit. But DFW is a whole different world within Texas.
Just came back. Looked at some beautiful houses but it is truly a sellers market out there. Barely any wiggle room for cash flow, when the numbers on crunched especially when a conventional loan is used to finance.
We did get an insider tip through family and put an offer on a SF. I don't know if anyone here would be able to help me analyze it a bit further. We actually crunched the numbers on this particular property for about 12 hours.
There are 2 keys to investing in an area far from where you live.
1 A GREAT property manager! Ask for references from other out of town clients of theirs and then call the references. Find out about average maintenance charges, time to lease a unit and fees from the clients.
2. While you don;t have to live in an area to successfully invest in it, you do have to be an expert. I live in Cleveland, Ohio and I see too many investors come from out of town and buy before they do their research. The risk you take in real estate is limited to the difference between what you think a house is worth and what it will actually sell for. If you are an expert in a local market, then you really reduce the risk and can invest with confidence.
Good Luck!
Fascinating response Laird.
I myself have had some experience with investing "in an area far from where I live". I cannot stress the importance of having high quality 'eyes and ears' on the ground.
Laird 2 questions if I may:
1. How do you source references from "out of town clients of theirs" that belong to a particular property management group?
2. If an investor takes the plunge and invests in a particular out of area market, say 'Cleveland', selects a property management group, then after a period of time, that property management group ceases all communication with that investor: How would you recommend that investor proceed??
I cannot stress this enough, when selecting an interstate property management team you absolutely must have excellent communication channels with that team. The feedback mechanism will save you grief and ultimately money.
My wife (business partner) and I are headed to DFW Texas to look at SFR's tomorrow.We are New Yorkers looking for an ideal buy and hold property. Very nervous!! Just wanted to know of any mistakes you guys might have made when shopping around for your first investment property. Any help would be greatly appreciated!
How did you experience go? Did you buy in DFW Texas?
I myself have had some experience with investing "in an area far from where I live". I cannot stress the importance of having high quality 'eyes and ears' on the ground.
Laird 2 questions if I may:
1. How do you source references from "out of town clients of theirs" that belong to a particular property management group?
2. If an investor takes the plunge and invests in a particular out of area market, say 'Cleveland', selects a property management group, then after a period of time, that property management group ceases all communication with that investor: How would you recommend that investor proceed??
I cannot stress this enough, when selecting an interstate property management team you absolutely must have excellent communication channels with that team. The feedback mechanism will save you grief and ultimately money.
Gary- Great to see you understand the true importance of having a qualified "team" in place, when I say qualified, I mean full accountability A-Z, especially being so far away, not just management by the construction, acquisition, etc..... its all important from such distances. I cannot tell you how many times I have encountered a case where someone purchase don faith and failed to complete the due diligence on the team on the ground. Have you purchased in CLE, if so, what part?