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Updated over 9 years ago on . Most recent reply

User Stats

41
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18
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JD Castillo
  • Residential Real Estate Agent
  • Lake Dallas, TX
18
Votes |
41
Posts

The days of buying property in DFW for 65-70% minus repairs are over. What percentage are investors buying throughout the Metroplex?

JD Castillo
  • Residential Real Estate Agent
  • Lake Dallas, TX
Posted

We are currently seeing a big swing to investors calculating an acceptable dollar amount for NET profit and not necessarily purchasing on a set percentage.  For example, if a house needs a true $5,000 in rehab, and the days on market are super low in the neighborhood, investors would be looking to make a quick and easy $10,000 on a house rather than purchase it at a certain percentage.  

SW Fort Worth 75-79%

Keller / Grapevine 75-83% 

Arlington /Grand Prairie 76-80%

North Dallas High End 78-82%

Cedar Hill/ DeSoto Rental 20k equity

Kesler Park  High End 81-84% or 20k

M-Streets 82-84%

Richardson 82-87% rental

Plano 15k profit

What are your thoughts on these markets and others such as Denton, Frisco, Lewisville, Little Elm, Flower Mound, South Oak Cliff, Seagoville, Arlington Heights etc...

Most Popular Reply

User Stats

46
Posts
25
Votes
Mat Farmer
  • Nashville, TN
25
Votes |
46
Posts
Mat Farmer
  • Nashville, TN
Replied

@JD Castillo I hope more people see and absorb your post. I, as a profession, do direct placement of properties with investors, and the most frequent roadblock I run in to in today's market is investors expecting to buy at a cheaper price than the market will allow. A handful of my clients work with local real estate mentors who still teach investors to buy at 70% of ARV less rehab costs. Now this principle is great if you can find a property that meets that criteria (which is possible if you are the one out there pounding the streets and drumming up your own leads), but to draw a line in the sand and say that you will ONLY buy a property that meets this criteria is, in my opinion, a mistake. I fear these investors will watch a lot of decent deals pass by while they search for a white whale.

Like @Antonio Marte suggested, it is indeed a seller's market, and they definitely know it. The market right now dictates tighter margins. People, estates, municipalities, etc. know that there is a shortage of inventory and therefore the prices are appropriately reflected...simple supply and demand. The good news of all this? Do a good rehab, keep your costs under control, and once you are ready to flip, you'll have one of the few properties on the market and will likely keep your holding costs down. Given the appreciation the area has experienced as of late, there has been a trend of investor's receiving a higher selling price than the original quoted ARV (which are of course estimated by historical area comps). So, there is indeed a trade-off to the higher entry prices we are all experiencing at the moment. Okay - that's my soapbox...I'll step off now.

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