Texas Rentals -- any good areas for good Cash on Cash ROI?

Question

I'm a new rental property investor interested in the Texas market - however, after analyzing many properties, I can't seem to find any properties that offer a good Cash on Cash ROI of 10-15%.  Any recommendations on good areas where I should focus my search?

Account Closed · Answer

Abilene, Texas - Dyess AFB recently announced that they will host the new bomber. The base along with two major hospitals and three colleges make for a awesome rental market.

Phil Dodd · Answer

I have just finished a rehab in Dfw. It is cash flowing 715 month with a 22%coc. Deals can be found in solid areas of Texas but I don't think it is possible if you are not sourcing your own deals.

Account Closed · Answer

Real 20% cash on cash returns on rental property in B-C class neighborhoods (after realistic expense ratios are used) are going to be difficult to find in any major market. I strongly recommend you scour the maps for strong secondary and maybe even tertiary markets. Investor saturation is very real right now, and they've drive prices up/returns down in popular markets. Even major midwestern markets don't offer high yields anymore- I like smaller markets all day.

Tammy Patchin · Answer

Brian -

How are you sourcing your potential leads?  For those interested in Texas investing, I will tag you in a Marketplace post.

Rick Pozos · Answer

Everybody wants 10-15 or even 20% ROI. Well who doesnt???

The fact is that we are in a very low interest rate environment for returns. Have you noticed compressed cap rates on multi-family properties??? What are you getting on your money now?? If you are already getting 10% return, good for you. Dont get too greedy.

The reason that you are not finding properties that yield a higher than 10% return is because you are looking where all the retail people look for deals. Completely different.

Marketing for deals is probably what you need to do if you want to find some "Deals". Anybody can go on the MLS and look to see what is for sale, but investors will know how to find deals and let me tell you it is through marketing where you will find the deals.

OR maybe you need to lend the money to some friends or family members and be their hard money lender. You should be able to get about 10% return on your money. YOu might even be able to lend out of your self directed IRA.

Steve Rozenberg · Answer

There are definitely good deals here in Texas. I would make sure you define what a good deal is to you so you don’t just buy a low end Property that has a lot of Cashflow but is heavy time intensive to manage. We have a lot of out of state owners buy here In taxes that we manage for I was trying to make sure that they know exactly what they’re looking for before we help them find something

David de Luna · Answer

Following this post as I too am looking to invest in TX, preferably El Paso, but open, as long as it's better than 12% Year 1 CoCROI.

Haroon Malik · Answer

What do you regard as good ROI?

San Antonio will get you some Cash flow. Not sure if it will be good.

Charley C. · Answer

@Brian M. I just saw your post and thought I had a little more to offer than what you got so far. Consistent cash on cash returns really belong to new construction and development people (that's if you are looking at cash on cash, shorter term). To get good cash on cash, you can not hold it, you got to sell it.  check you pm

Sean Fisher · Answer

I used to live in Abilene, but was a renter. From what I understood at the time from girlfriend's parents was that you could buy property for pocket change. For instance, my rent was $200 for a 1 bed 1 bath on a half acre lot right next to a college. You'd think that would rent for a ton more, right?

Not sure how it is now, but doesn't hurt to try. San Angelo is more of a bustling town, but less than desirable tenants than Abilene and that's not saying much.

Personally, I'm shopping around East Texas, but that's only because I know the area better. Tyler is growing, too.

FYI, I live in Southern Oregon.

Texas Rentals -- any good areas for good Cash on Cash ROI?

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