DFW Investing Strategy

[Tom Hacku]

Hey guys, my girlfriend and I are brand new to the Dallas Fort-Worth area and are looking to dive into real estate investing in the next 6 months or so. I am still new when it comes to real estate investing. Right now I am just taking the time to learn as much as I can about the DFW area and I am looking to figure out which strategy might work best. I have a ton of things I could talk about, such as getting started in REIA groups, which specific areas outside of Dallas still have good deals with appreciation potential, etc. but I'll save those for other posts. But the first thing that caught my eye in the area is the amount of construction going on, specifically with new apartment complexes being built. So going back to strategy, I am looking at the possibility of multi family homes with house hacking vs single family home rentals. With all this new construction going on and a lot of high quality tenants choosing to move into these brand new complexes, is investing in a multi family home and trying to rent out the other units still a good strategy? How would this compare to renting out single family homes? It seems like this definitely can vary depending on which area I choose to invest, but I would appreciate any input as a newbie to the DFW area and real estate.

[Paul B.]

@Mason Peacock

I once wondered that myself. If the institutional investors are so smart, why do they focus on Class A properties, when there are higher returns in Class C? I asked an industry veteran (in commercial real estate finance) once, and he told me that the institutions have boards of directors and layers of management, which means there is a lot more accountability in every investment decision. Class A is perceived as much safer, which makes up for the lower returns. If an investment fails (and it can happen to anyone), it's better to be able to say they followed all the "rules" and bought in a prime neighborhood, than to have to explain to the bosses why someone thought buying a run-down apartment complex in a blue-collar part of town was a good idea. 

Years ago, back when IBM was the gold standard in the computer business, they used to have a slogan, "Nobody ever got fired for choosing IBM." The tagline was silent on whether they were the best product; they only claimed to be a safe choice. Whoever was making a purchasing decision for a company would be covering his a**.