Dallas Investors- what’s a reasonable Cash Flow nowadays?

[Fatin K.]

So excited to have this BP community as a wonderful resource! I am a newbie aiming to purchase my first rental this year in the challenging Dallas (DFW metroplex) market. Would love to get your feedback on realistic cash flow expectations. 

I am aiming for at least $350 cash flow ($120 including 15% contingency for maint/vacancy/Cap Ex) and my target buy & hold SFR is in the 160-180K range (Fort Worth or Denton region). I'd love to hear the perspective of active and experienced investors on cash flow expectations and areas to target for that.

Thank you so much!

[Andrew Herrig]

It's getting tougher to find properties that cash flow in DFW (at least in Dallas and close in suburbs where I am). Properties we bought 3 or 4 years ago keep going up in value, but rents are not keeping up with property tax increases. 

Across our portfolio, property taxes alone account for 25% of the rents. If you add 15% for capex/maintenance, 5% vacancy, 5% insurance you are already at 50% expense ratio if you are self-managing. 60% or more if you have a manager (and you account for monthly management fee + cost to place a tenant).

The point is, to cash flow after expenses, you need to do better than the 1% rule. It can be done in certain parts of DFW, but it's getting harder.