How are the current rental markets in Houston and Dallas areas?

Question

Hello,I am currently an investor in Atlanta, GA. My husband and I buy mostly rental properties and gain capital through the return on rent and a little appreciation. We are currently in the process of looking into the real-estate market in Houston and Dallas along with surrounding areas. We travel back and forth from both cities multiple times a month. So we wouldn't be a typical out of state investor. Some questions I have:1. Is the rental market still strong in Houston and Dallas? 2. How are we able to make a return on rental properties that have high tax specially in the Dallas areas where property taxes are significantly high. 3. What are some good neighborhoods to look into and what are rent ranges around these areas for SFH or Single family town house. 4. What other cities would be a good area to look into that are near Houston and/or Dallas.5. What are some good strategies that have worked for you in these markets? I really appreciate all the comments.

Lucia Rushton · Answer

@Anam Rafi There are great pockets in Dallas. My experience thus far is that properties that can rent between $1,000-$1,900 are hot cakes. It's super important that you have a strong application process if you self-manage. Just because we see 100's of interested parties, alot do not qualify for a multitude of reasons. Also pay attention to the market, get a CMA of the rentals in the area. Don't be personally charged to a specific $ and ignore the signs - because your property will stay on the market.Properties listed between $2,000-$3,000 have pickier applicants. And anything over $3,000 may sit.....awhile.If I can help you at all in the Dallas market, please reach out. I can also refer you to people in Houston. Best wishes.

Anthony Kwon · Answer

@Lucia Rushton hits on the market trends on point.1. To answer a bit further, the DFW market will not cease to grow as we have too many corporation headquarters, divisions, data centers, and re-leasing happening that will only increase the population and economy. Houston is also a great market but you need to know which cities to go. Until recently, Houston had a greater GDP than the Dallas Metroplex.2. Don't go to the high tax areas unless the rents make sense.3. That's the bread and butter for real estate agents. I'll let you consult an agent of your choice ;)4. Austin, but again, you must know which areas to go. San Antonio is great and Midland/Odessa is one of the fastest growing cities still.5. I'm personally working on transitioning to become an investor, so I can't speak for myself. I've seen lots of fix and flips, have yet to meet a wholesaler, but I know they're out there, and of course there's rentals. I have a few friends that are doing Airbnb and they're doing well with that too.Hope that helps! Don't hesitate to reach out with any questions, concerns, or need references for any particular city.Cheers,Anthony

Bruce Lynn · Answer

DFW market is strong....the trick may be getting the right properties at the right price. I agree with everything @Lucia Rushton says....I've seen lots of different strategies work, but what I see works best is typically 3/2/2 better neighborhoods with that rent in the $1100-2000 range. You can back into the numbers.....what income do renters make, that 25% to 30% of that and that's what typically they can pay in rent....then find the house that fits that number.I do have clients that have houses that rent for much more than that and sometimes we get different renters with those kinds of homes....however the rents are often lower than what makes sense to me on those.....I often tell them to sell vs rent...and buy 2 houses or 3 houses in growing areas. Right now the main areas I like are around the big circle of DFW....in the cities that will likely grow.

Ryan Blake · Answer

@Alan Zee You should probably collect 1 month or 1/2 month rent for security deposit. I am guessing that some C class places will require less because it is a burden for the renter to come up with a first, last and security.

Alan Zee · Answer

Hi, can anyone speak on the rental requirements of the DFW B/C class properties in regards to security deposits? I've been seeing alot of $100 or $200 security deposit when the rent is $1000 for 30-100+ unit size apartment complexes. Is this common in Texas or DFW?

Brian Foster · Answer

Houston is still a great value, and we are growing by 100,000 people a year.https://texasturnkeyproperties.com/houstons-growth-will-outpace-nations-and-the-states-over-the-next-five-years/

Margaret Johnson · Answer

Not familiar with Houston but for Dallas there is an entire metroplex full of large suburbs to choose from and most of them have lower taxes than Dallas. Collin County is probably higher than Denton County. But there are a lot of places in the Dallas area that are more affordable than Dallas proper and have better tax rates and city leadership. For DFW one hot area is the Hwy 380 Corridor on the north side of Frisco/Little Elm.