Rental Arbitrage – Dallas TX

[Anthony Martinez]

Good evening!

I have been a realtor in Florida for about four years, but I am moving to Dallas, Texas, in about a month – thus, I am new to the Texas real estate market. 

I wanted to jump on BiggerPockets to see if anyone in the Dallas area is in the Airbnb field of Real Estate. If so, which areas generally allow for short-term rentals, and most importantly, which areas in and around Dallas do you find most rewarding? 

I appreciate any feedback, as it would be beneficial! I appreciate any help you can provide. 

[Bruce Lynn]

Welcome to Texas.

Lots of the bigger cities have either pretty strict regulations or are considering implementing regulations, depending on what you have. Arlington for example allows STR in a very small designated area near the stadiums. Fort Worth stand alone STR only in commercial areas. Dallas is still debating regulations as they have for several years, but seem to be getting closer to implementing regulations which they say would eliminate 95% of the STRs. Plano is trying to crack down. Probably almost any city like Frisco where almost every home is in an HOA likely prohibits STR. https://www.fox4news.com/news/...

I would say arbitrage is pretty tough as most apartments will not allow subleases and will figure out pretty quickly what you are doing and shut you down is my guess. There may be some arbitrage here, but I don't think it is extensive. Maybe on smaller self managed properties might be better where the owner knows and agrees with what you want to do. Not sure if they would want to talk to you or not, but maybe if there is new construction apts in lease up, so if you hit them with the right proposal, maybe sharing the profits, they might be more open to it. We're syndicator central here, so you might go to some of the meetings or conferences and make your elevator pitch. One trick today might be knowing about commercial multi-family loan covenants and if they allow STR or what % in the building. No good operator or PM company wants to violate those in today's lending environment.

With all that said, I'd probably look at the smaller cities around DFW if you think there is a good demand driver for the business.   Maybe Sherman or Denison.  Maybe Van Alstyne, Denton, Howe, Princeton, Waxahatchie.  Not sure those are good markets, but less regulation potentially.