Looking to buy investment property in Dallas? As one of the fastest growing cities in the US, Dallas offers great opportunities for real estate investors. With a business-friendly environment, affordable housing and a diverse economy, demand for rental property remains strong. This article provides tips on finding and evaluating investment property for sale in Dallas. We’ll cover the best areas to buy, what to look for in a rental property, how to calculate returns and more. With the right property in the right location, Dallas investment real estate can generate steady cash flow and long-term equity growth.
Target affordable neighborhoods with upside potential
When buying investment property in Dallas, stick to more affordable neighborhoods that still have room for growth. Areas like Oak Cliff, Pleasant Grove and Irving offer relatively low home prices but are seeing new development. Look for signs of gentrification like new restaurants and businesses opening up. Close proximity to Dallas proper is also a plus. Though farther flung suburbs may be cheaper, they won’t see as much rent growth. Ideally target property selling for around $150,000-$250,000.
Look for homes appealing to working-class tenants
For Dallas rental properties, stick to simple yet livable homes. Tenants here are mostly working-class families and younger singles, so flashy luxury finishes aren’t necessary. Aim for 3-4 bedroom, 1-2 bath homes around 1,200-1,600 square feet. Make sure the floorplan is sensible and there’s adequate living space. Curb appeal and outdoor areas like a patio also help attract tenants. Focus more on basics like good bones, updated kitchens and baths, energy efficiency and storage space.
Do the math on expected returns before buying
Any investment property requires careful financial analysis before purchase. Make sure to calculate the rental income, expenses, cash flow, appreciation rate and cap rate. Account for property taxes, insurance, maintenance, vacancies and property management fees. Target a cap rate of at least 5-7% in Dallas. Appreciation of 3-5% also lifts total returns. Aim to recoup your down payment and closing costs within 5-7 years. Conservative projections keep you grounded when evaluating potential deals.
Hire a property manager to handle day-to-day operations
Active real estate investors may self-manage their rentals to save on fees. But out-of-town buyers often prefer using a property manager in Dallas. For 8-12% of gross rents, they’ll handle tenant screening, maintenance requests, collecting payments and more. Be sure to still visit properties occasionally and maintain relationships with tenants. But with a manager, owning investment property in Dallas is low stress even from afar.
With strong population and job growth, Dallas offers smart real estate investors stable cash flow and equity gains. Focus on affordable yet livable homes in working-class neighborhoods. Crunch the numbers to ensure adequate returns. And leverage a property manager to oversee day-to-day operations hassle-free. Follow these tips to successfully add Dallas investment properties to your portfolio.