All Forum Posts by: Mahdi Mike

Most deals on the MLS that don't need work and are rent ready are gonna break even at best. That's just the reality of the DFW market right now. You either need to get creative with how you are going to rent the property (rent by the room, short or mid term rental), or you need to buy something that needs work at a discount, then add value to the property and increase rents.

@Mahdi Mike  Use 7-8% for your vacancy rate.  I think I posted that before.  That's probably high, but probably impossible to calculate on single family accurately.  But look at the dynamics of the market right now.   Very tough on first time low income borrowers to buy.   So that will increase length of stay.  I say 7-8% for your model if you're trying to plug in a number, because when you have turnover I would expect about a month of vacancy....but depends on so many factors....are you asking the world for rent or fair rent, or slightly under market....what we call Best Price/Best Product.  How restrictive are you going to be on tenants...will you accept pets or not.  Probably 80% have pets, so if you say no to pets, you'll have higher vacancy.   Will you run the properties into the ground, or keep them maintained and well kept?

1% rule is probably not valid any more in most cases these days in the nicer/newer neighborhoods....but that is the target.  Start there on rent.   You might get .7 or .8 vs 1%....if you're at $2000 a month for $300,000 the numbers don't really work unless you are using bigger down payments.  Cash flow is always a function of how much you leverage?  Right.  Then you can increase your cash flow as rents go up and if interest rates go down and go pull out equity.   That's exactly what the big guys are doing right now.  On big multifamily and probably other commercial loans you'd be looking at 60-65% leverage.  3 years down the road, hopefully your rents have gone up and you refinance.

I do see 1% rule...sent out one today for my multi investors....but not a lot of those.   You have to jump on them though, be ready to rock and roll.  Have your cash proof of funds and prequal letter ready to go.  Multiple offers already after 1 day on the market.   We're back in GO mode in DFW.

@Mahdi Mike   As many have said in your previous posts, Frisco will be extremely hard to make good investment numbers work.  Lots of factors for that.  Newer homes, popularity for owner/occupants, low rental prices, and many others.

Plano maybe older neighborhoods might work.

You probably need to look outside those two cities....plenty around you that probably will work better.

One way to think about your analysis.....just one factor that might help you.  Back into the numbers.  What is average sales price in Frisco...probably $600,000 now.  So probably not possible, but your target rent would be $6000/month.   So now you need to see what demand is for $6000/month properties.  There are some, but that market at $6000 and above is very thin.....so if there was a market at $6000  at 3-4x rent you need to find a renter that makes 18,000-$24,000/month in income.   So somewhere around $250,000.  What's the median income in Frisco?

Lots of people have lots of different models that work...right?...but over the years, maybe 40 years, what I've seen work best for long term wealth on single family is just lower priced 3bed/2bath/1car or 2 car.....places like Anna...or Gunter.  Buy in the path of progress.   40 years ago Frisco had one flashing red light at Preston and 121....with one lane going each direction....not even red/yellow/green light.  Growth is coming north of you.  Buy there.

@Mahdi Mike all are great.

If I have to stick to that list (and ignore "Other"), then Irving is the winner.  You are more likely to find a good purchase price point there, probably on older inventory that will require some rehab - but that is what we want to create some equity.  And that market rents fast, huge renter pool, working-class demographic for the most part, middle of DFW - great place to be.  Those other locations will all carry a very pricey entry price.

I did not closely read the other posts, but I did see someone mention Haltom City - I like that city, and those around it (e.g. east Tarrant County).

Go Dallas proper, southeast dallas is ghetto but I think if you get some other investors it can change. I'm all about it.

You can get good tenants in a C, D area.  you can also get horrible tenants in an expensive B area.  Its all in the screening.  Choice of area has more to do with your goals.  do you want cash flow or appreciation?  sounds like you are in it for an appreciation play.

@Mahdi Mike too vague of a question. What is your budget ? DM me if you want to discuss.