The Dallas Fort Worth Texas area is a great location for real estate investments.
Northern Texas has a booming economy and a growing population making it an ideal place to invest. This area also offers fairly low living costs and higher salaries, meaning renters can afford to pay higher rent costs.
But even though the DFW area is a great investment choice, investing in the city of Dallas Texas is not the best option.
Why do Investors Often Think of Cities Before Suburbs When Investing?
When it comes to Dallas real estate investing, it’s natural to think of the city of Dallas. Many investors gravitate towards the city because it’s what they know. With hundreds of suburbs around the DFW area, it can be daunting trying to evaluate all of them.
It may be easier to determine a specific location if you live in the DFW area, but many investors are out-of-state and unfamiliar with Dallas’ suburbs. The DFW metroplex includes 12 counties and 117 cities and towns. Without living in the suburbs, it’s very challenging to choose a place to invest.
Related Post: Top 3 Dallas Suburbs for Investment Properties
3 Reasons We Don't Recommend Investing in the City of Dallas
Investors often come to us asking what we look for when it comes to choosing a solid investment property – so, here’s what we tell them:
It's Difficult to Find Houses Built in the Last Ten Years
As houses begin to age, the repairs start multiplying. Many things need to be repaired or replaced when they completely give out. That’s why we recommend investing in homes that are ten years old or less.
Things begin to deteriorate over time which can be costly. Carpeting, painting, and appliances begin to wear out or break down after ten years. Older homes have additional problems that are more difficult and expensive to replace like pipes, roofs, and windows.
Older homes often used piping material like copper, galvanized steel, terracota, and polybutylene plastic pipes that wear out over time. Older plumbing systems can leak into the walls and under floors which can be very costly to repair. If the leaks are left too long, they can also cause structural damage to the walls and floors.
Here’s a quick key to the life expectancy of house features:
Items that last 5-15 years
- Gas ranges
- Dryers
- Washing Machines
- Dishwashers
- Trash Compactors
- Microwave Ovens
- Lighting controls
- Kitchen Faucets
- Garage door openers
- Security Systems
- Air conditioning Units
- Water Heaters
- Smoke detectors
Items that last 15-30 years
- Countertops
- Decks
- Screen Doors
- Roofs
- Linoleum floors
- HVAC systems
- Sprinklers and Valves
- Tennis Courts
- Windows
- HVAC systems
- Furnaces
- Tankless Water Heaters
The tough part? Many of the houses and rentals in the city of Dallas are older constructions.
Because of this, they often come with more maintenance and repair costs than newer homes built in the suburbs. These costs eat into your profits and limit your investment potential.
Many Properties Don't Have HOAs and Amenities
Rental properties with HOAs and amenities tend to fetch a better price than those that don’t have them. While there are some exceptions, many of the homes available in the city of Dallas do not have the amenities that current day renters are looking for.
According to housing.com, renters are looking for safe, well-maintained rentals. In addition, many of today's renters are looking for amenities like fitness centers, play areas for children, and public pools.
These amenities are much more difficult to find in rental properties in the city of Dallas.
Homes Are More Expensive Per Square Foot (Which Means Smaller Returns!)
Dollar for dollar, you can expect to pay more money for a rental property in the city of Dallas than you would in the suburbs. Dallas offers more expensive homes per square inch which means a smaller return on your investment.
MashVisor, a real estate analytics website, explains, "Suburban homes are generally larger than city homes. On average, they’re larger by 300 square feet, while urban homes are more expensive by $0.18 per square foot."
In other words, you get more bang for your buck when you purchase in the suburbs.
The Bottom Line With Dallas, Texas Real Estate Investing
When it comes to investing in Dallas, it’s better to start with your goals and numbers rather than a specific location. Determine what’s most important to you. Once you know your goals you can choose what location best suits your needs.
If you’re an out-of-state investor, or if you’re simply overwhelmed trying to choose a location for a rental property in one of DFW's many suburbs, LEAP Property Management Company can help.
Contact us today to learn how we can help you find the right investment property for you.
