Market Constraints - Anyone else dealing with this?

Question

Hi,

I have been diving deep into the suburbs of North Texas, and its been super difficult to get the 1% rule and or generally break even properties. But from my market research, I think there are so many great signals of future growth, that its visionary work to invest here. I was wondering for those that have more experience with the long term and hold strategy, if I don't get certain signs of break even today, does that mean it's time to pivot and/or why? My concern is that by continuously flipping from market to market, I'll become an expert of none, but more experienced people - let me know what you think in the comments

Prem Rao · Answer

@Greg Scott - want to connect? I am troubling getting that deal flow to me that I can vet out and review, would love to take your advice

Greg Scott · Answer

Prem:

I started buying turnkey rentals and found the returns to be poor.  Then I started buying fixer-uppers in DFW and at one point had 9 in the area.  Those returns were fantastic.  I've since moved to apartments so am no longer in the single family game but still get a lot of deals coming across my desk.

Prem Rao · Answer

@Greg Scott you're purchasing far from turn key in the DFW area as your main Strat?

Lucia Rushton · Answer

The 1% rule is an historical data analysis tool. And DFW in particular has not hit the 1% rule in over 5 years if not 8. Now, are there outliers, yes always in every market.

There are also no low hanging fruit in this market.

We still do not have enough inventory. While it shows we are now sitting at 2 1/2 months of inventory (in the investor price point) this is the highest # since Jan 2020, yet we continue to have people move to Texas daily in record numbers.

As always my opinion,

Greg Scott · Answer

There are still deals to be had in DFW.  There are several that crossed my desk last week.  Based on the source, I would consider these pretty reliable numbers.

After-repair Price Opinion     $225,000
Asking Price   $109,990
Suggested Price          $100,000
Estimated Equity Capture      $34,826
Estimated Cash Flow per Month        $181
Estimated Cash on Cash Return         8.2%
Estimated Out of Pocket (hard)          $26,408--------------------------------


After-repair Price Opinion     $385,000
Asking Price   $213,500
Suggested Price          $213,500
Estimated Equity Capture      $68,066
Estimated Cash Flow per Month        $214
Estimated Cash on Cash Return         6.7%
Estimated Out of Pocket (hard)          $38,132-------------------------------------

After-repair Price Opinion     $225,000

Asking Price   $109,990

Suggested Price          $100,000

Estimated Equity Capture      $34,826

Estimated Cash Flow per Month        $181

Estimated Cash on Cash Return         8.2%

Estimated Out of Pocket (hard)          $26,408

--------------------------------

After-repair Price Opinion     $385,000

Asking Price   $213,500

Suggested Price          $213,500

Estimated Equity Capture      $68,066

Estimated Cash Flow per Month        $214

Estimated Cash on Cash Return         6.7%

Estimated Out of Pocket (hard)          $38,132

-------------------------------------

After-repair Price Opinion     $340,000
Asking Price   $170,000
Estimated Equity Capture       $63,863
Estimated Cash Flow per Month        $318
Estimated Cash on Cash Return         13.6%
Estimated Out of Pocket         $28,022---------------------------------

After-repair Price Opinion     $250,000
Asking Price   $180,250
Suggested Price          $180,250
Estimated Equity Capture       $34,140
Estimated Cash Flow per Month        $194
Estimated Cash on Cash Return         6.9%
Estimated Out of Pocket (hard)          $33,807

After-repair Price Opinion     $340,000

Asking Price   $170,000

Estimated Equity Capture       $63,863

Estimated Cash Flow per Month        $318

Estimated Cash on Cash Return         13.6%

Estimated Out of Pocket         $28,022

---------------------------------

After-repair Price Opinion     $250,000

Asking Price   $180,250

Suggested Price          $180,250

Estimated Equity Capture       $34,140

Estimated Cash Flow per Month        $194

Estimated Cash on Cash Return         6.9%

Estimated Out of Pocket (hard)          $33,807