Apt syndications or my own rental property, Dallas, Texas

[Sonu Sundar]

First time investor, Plano, Texas

I live in Plano area in an apt and have seen apt bldgs growing like mushrooms. I would like to invest in real estate in Plano area but can come up with 100K only at the moment.

What is the best way to invest this money? For cash flow or appreciation? If I want to invest w..apartment builders, which firm would you recommend?

Is it better to be a part of a apartment syndications ?

Or

Should I invest on my own in the rental properties, South of Dallas where I may be able to find rental properties?

Help is greatly appreciated.

Sonu

[David Thompson]

Hi Sonu

If you simply want to be in apts, you are in the right city. DFW has strong pop and job growth trends firmly in place that folks still underestimate IMO. I also agree with Chibuzor above that it sounds like you would be a candidate to act as a limited partner in an apt syndication deal. You can be completely passive, or with intention, learn from the experts by asking questions, reviewing progress and visiting the location as examples.

I differ however with you on what type of apt. At this point in the cycle, new construction A class apts are more at risk to a slowdown, think high rent prices and over building, then owner rent concessions. In contrast, value add sydicators look for older class B properties built in the 1980s and renovate them, improve operational efficiencies to drive value for investors. The demographic is dual income hard working class types typically employed in lower paying service, support and labor type roles that hold up better in downturns than higher paying white collar jobs.

As an example of the resiliency of B class value add vs type A new construction, look to Houston. When oil dropped from $100 barrel to $50 barrel, $100k oil jobs disappeared, class A occupancy fell from 95% to 80%, while our class B properties actually slightly increased occupancy from 92% to 93%.

We are very active in DFW and can share some ideas and experiences with you offline so you are better informed.