Prosper vs. McKinney - thoughts?

[Sabina S.]

I am an out of town investor, who is planning to purchase an investment property in Dallas. My goal is to hold it and rent it out and potentially sell it (in about 5-10 years). I am down to two choices: one located in Prosper (Artesia Development -large 2,700 home community that has been around since 2006) and in McKinney (Bloomridge Development - small, new community with only 100 homes). Both properties are 4 bdr/3 bath, media and game room, good floor plans. The McKinney one is slightly bigger and about 40K higher priced, but community pool and common areas are still being constructed. Thoughts with regard to rental and appreciation values in these areas?

[Bruce Lynn]

These large homes normally don't make good investments.  There's a much more limited group as you go up the price range that can afford to rent these.  Then the ones that can afford them should be buyers and not renters.  It will be very tough to make good returns on these types of homes.

I'd suggest buying the smallest and least expensive home you can....3bed/2bath no media/no game room.

There are a lot more renters that can afford $1750-$1950 a month vs perhaps $3000-$4000/month.   As you move up the rent amount curve the market gets thinner and thinner.  Also I'm thinking your turnover will be more and your vacancy times longer...and this takes a big hit on your returns.

Sounds like you are also trying to buy a new home.   Again these almost never work well for investments.  You'll typically get much better returns on pre-existing homes.   Probably right now the sweet spot are homes in this area that were built in 2007-2010 timeframe.

That's probably not what you want to hear and you probably won't follow our advice, but those are my thoughts.