Any Waco Area Agent Investors?

[Donna Welschmeyer]

Hey everyone, we're traveling to the Waco area at the end of this week. We're exploring some areas in the southern US for retirement and investment potential. Any agent investors out there that might have time to meet for a cold beverage on Friday the 22d? We'd love to chat about the real estate market in general and the potential for SFR investment. Thanks!

[Marshall Hooper]

Waco is going through an interesting transition right now. It used to be a cash-flow goldmine for lower-end SFR’s. In fact, only 45% of homes in Waco are actually lived in by the person that owns it because investors learned a long time ago that they could buy a house for $20k and rent it for $450. But due to the “Magnolia Effect” and the counties approach to capitalize on it regardless of logic, these homes are now appraising much higher than they are probably worth.

You can still find a house for $60k that rents for $700, but you can find similar spreads in markets like Fort Worth and Austin that have better chances of appreciating going forward. Until Waco can find a way to add more jobs that aren’t service based (only added 1200 last year), then I expect it’s growth to flat line to decline.

It will also be interesting to see how investors in the area react to the higher property taxes if their protests are denied. It will be hard for many of the tenants to pay higher rents considering that median pay in Central Waco is $26k and median rent is already $756. So we could potentially see a large amount of rental grade properties hit the market this summer at unreasonable prices. My partners and I are keeping our hands in our pockets for the time being in Waco until we see home valuations come back down to something more reasonable.