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Updated over 8 years ago,

User Stats

21
Posts
2
Votes
Jeff Houpt
  • Investor
  • Fort Worth, TX
2
Votes |
21
Posts

Thoughts on Expanding SFR in DFW Despite Huge Price Jumps!

Jeff Houpt
  • Investor
  • Fort Worth, TX
Posted

Hello everyone,

I've been listening to the podcast for a while and decided to join the community rather than just be a fly on the wall :)

So I've been building up a 3/2 SFR portfolio in the Dallas/Fort Worth area and as with any hot market deals are becoming much harder to find. I used to be able to pick a property for $70k, put $30-$40k in it and rent it out for $1100-1200, and the properties I bought then are now worth double what I paid just 3 years ago and rent is $1400.

Those opportunities aren't readily available now but since my focus is cashflow I can still make deals work.  However that means that I've been switching over to targeting newer houses that need less work but still do a gross net of $400-$500 per month (just talking about Rent - Mortgage- Taxes - Ins).

I think most people would say that is a great cashflow, and I agree but I'm beginning to worry that despite the cashflow I'm overpaying. I truly believe in the Warren Buffet style thinking where you make your money when you buy the property. So even if I have great cashflow today, if I overpay then I hurt my returns on the backend. 

But if I hold for 20 years does it really? If I overpay by $15k today, what does that even matter if I cashflow $200+ for 20 years and sell it for triple what I paid today.

The future is not certain so maybe house prices go down, maybe they don't. I'm not overleveraged, and I don't think I'm at risk of losing everything even if prices go down 20-30%.... But I am a big thinker and I want my strategy to work as I move towards 100 or 1000 units. I've done things on my own to this point but I think it's time to start talking with people like you and get some second thoughts!

So my question is if your goal was 100+ SFR homes, would you continue to buy and hold houses in a hot market, knowing that there may be a 20%+ dip in value in the next 5 years as long as they cash flowed well....or would you adjust your strategy to go to less hot markets where you can build more value into what you pay today for the property?