Dallas Fort-Worth Metroplex is one of the best areas to invest in real estate, our Team is especially experienced in helping investors to build their portfolio in Dallas. For those who have not been in Dallas, we summarize the following 10 points explaining why so many investors are choosing DFW Metroplex as their investment destination. This is our new series about Dallas Investment, and you can learn what other investors have done.
Industry Growth
There are new industries growing in the Dallas Fort-Worth areas coming almost on the daily basis. Many companies are relocating their HQs to Dallas, Dallas has a significant number of Fortune 1000 HQs based here or have very sizable operations. Some well-publicized companies are Toyota, General Motors, State Farm, Texas Instruments, AT&T and almost all the insurance companies. Dallas has been positioned itself as a leading city for financial, aviation and IT sectors, and due to its location and growing availability of professionals, as well as no state tax have been the catalysts to drive growth of companies to establish their operations here.
Diversified Industries
Many investors compare Dallas to Houston which I actually disagree. Houston is the “Energy Capital of the World”, its employment base is highly dependent on energy and engineering industries that are closely related to energy sectors. In contrast, Dallas is much more diversified, when someone asks me what is the primary industry in Dallas, I always tell them there are 5 of them, and none has a significant dominant share. The key industries here are Financial Services, Education, Healthcare, Telecommunications and Aviation. Within financial services, there are lots of insurance companies now headquartered in Plano and Richardson areas, and banks are based in Dallas downtown areas, Healthcare is a major sector here and you can see many new hospitals being completed or under construction. We also see growing telecommunications companies based out of Richardson and Irving. The falling oil price, which is hurting Houston but helping airlines, many airlines are based out of Fort Worth areas, and many aviation related companies such as helicopters, engine manufacturers and other aviation related companies are also based in the DFW Metroplex, with many companies actually have their R&D and manufacturing centers here.
Booming Population
You simply just need to do a quick Google search on Dallas population growth, and you can see the amazing population growth that had happened in the past 10 years and also projected population by 2020. DFW will very soon become the 3rd largest metroplex in the United States.
When my clients arrive in Dallas, I simply just need to take them to a parking lot or the local school ground, immediately, you can see car plates from California, Oklahoma, New York, Michigan, Alabama. Another good example is look at school staff at our local school here – the teachers are from everywhere – at least 12 states, and they all moved here with intention to stay here for a very long time. Apart from interstate migration, immigration is another main growth factor driven by families from Asia, Latin America and Middle East. Within past 6 months, we had 10 families moved into our neighborhood, 2 are from Australia (including ourselves), 1 from India, 2 from China, 2 from Canada and 3 from other countries – this is a sample of what is happening in Dallas right now.
Booming Professional Families
Another important factor is you want a city to attract professionals, professionals will drive up wage growth, and will drive up the rental and property price. I see a lot of professionals from California on same wages in Dallas. They are much better off in Texas as there is no state income tax on professionals, meaning that they can use the additional income towards their purchase and able to afford more expensive properties.
Here are some examples just from my own circle of clients on what kind of jobs they have in Dallas. A young graduate received an offer from The Fossil Group as a designer for the group, a client from Atlanta was transferred here and works for Deutsche Bank, a senior marketing executive working for State Farm, a senior accountant got transferred from Atlanta to Dallas, a software designer got transferred from California to Dallas, a network engineer from Missouri to Dallas, a project manager got transferred from New York to Dallas. This shows Dallas is growing, and also getting richer at same time.
Affordability
As I came from Australia & Canada myself, I also have many clients from Asia and Middle East. I don’t need to emphasize here how affordable U.S. is compared to most countries in the world. Dallas ranks as one of the most affordable cities to raise family in the U.S. – Please refer to our presentation “What can you buy” – and you can see how you can buy a decent home for less than $200,000 in many areas of DFW Metroplex. As I have told many of my clients – You don’t need to spend a million dollars to live like a millionaire in Dallas.
Education
Education is another factor why people are moving to Dallas. It’s another point to illustrate “You don’t need to be a millionaire to receive good education”. I live in Richardson area and Richardson Independent School District (RISD) is consistently ranked as one of the best in Texas, and its high schools are also among top high schools in the U.S. – The property price is typically $250,000 to $400,000 which is considered as expensive properties in Dallas.
I laughed when I attended Keller Williams Annual Awards Ceremony and there was a prize for “Luxury Home Agent” of the year – and definition of Luxury Home in Dallas is any property above $500,000. I told my fellow realtors that for $500,000, you will get half-1 bedroom condo in Sydney, Australia, and you will get 3 parking spaces in Hong Kong or China.
Schools are well funded here because property tax is higher in Dallas, and school tax is generally higher than most of other states, and as the result, schools tend to have a lot of resources and have smaller class sizes.
Low unemployment rate
We talked about different industries are coming to Dallas, and this has also driven down unemployment rate in Dallas. It has one of and probably lowest unemployment rate in North America. The hardest part for employers in Dallas right now is unable to find an employee, I tried to recruit an assistant once upon the time, I received 7 applications, and by the time I called all of them back, 3 already found jobs.
Job growth is what drives many professionals moving here, as well as job choices, both factors will usually lead to income growth and demand for properties.
Location choices for investors
One really important factor is choice of locations. When I meet my investor client, I usually plan out a strategy with them – and highlighting the areas and types of properties they can consider. This is similar to building a balanced portfolio with stocks or mutual funds. Every investor has different objective, some have long term hold strategy, while some only have short term time-frame.
In terms of location – I will usually segment them into Growth or Income, they do not go together most of times – so investor needs to decide if they are going for growth or income. In a growth oriented areas, even though yield maybe lower, the rent growth tends to be higher than income areas; so eventually, income yield will catch up even though the initial capital cost is higher.
Some of the popular areas my investors are buying include: Plano, Garland, Mesquite, Arlington, Fort Worth, Mansfield and Richardson areas.
Diversified property types
Another key point to discuss are types – there are 6 types of properties where my clients are considering – most of these choices are not even considered by many international or interstate investors because of price. Essentially, my clients have purchased properties in:
A) Single Family Homes – AKA: house! These are 3 or 4 bedroom properties, which seem to be the most popular type of property, typically 2 bathrooms with 2 garages, property price can range from $100,000 to $300,000 with sweet-spot for investors between $100,000 to $200,000 range.
B) Condos – which are also called units or flats in some countries. Several of my clients are specifically looking for condos. In Texas, sometimes it can be confusing as some townhomes are also considered as condos even though they could be 2000 sq.ft! I have 2 types of investors into condos – first type are those want to get started with investments with limited capital, as the cheapest condo I had sold was $35,000, this could be a quick entry point for first time buyers. The second type is the complete opposite, I have clients purchased condos near SMUs, and they were sold for over $260,000, these areas have no single family homes left and condos are the only properties you can purchase there.
C) Duplexes: I had sold several duplexes – these are joint-properties (2 x half-plexes) with a common wall in between. Duplexes usually can produce better rental yield, as you have 2 income producing streams instead of just one. A common exit strategy is to sell half-plex by half-plex which, if you are in a hot demand area, you can make a decent profit from this strategy.
D) 4-Plexes or more multi-family properties: Similar to duplexes, but 4-plexes are 4 units. You get 4 separate rentals, 4-plexes here are either up and down or in a few cases, side by side or front and back. The exit strategy is different but essentially you can sell them as “condos” instead of half-plex, and sell them unit by unit.
E) Commercial Properties: Dallas is a great place for commercial properties due to population and business growth, with many businesses expanding here. I had done several commercial properties over past 18 months – I found strip malls usually perform the best as new shops are coming in and this will take out the parking space and turn them into shops, commercial leases usually go for 5 to 10 years witha annual increase in rent.
F) Land – Many areas are becoming very popular, and investors are buying up “the last remaining lots”, it’s a crazy concept for some investors as they think Texas is so big, why bother buying a piece of land? To be fair, land (lots) are relatively cheap here, some are sold under $10,000. I have several clients who just want to diversify and hold on to lands and waiting for developers to approach them for joint venture. There are 2 strategies involved in buying land – one is buying “last pieces” on desirable neighborhoods, the other strategy is to buy larger parcels and waiting for commercial developments or developers to build communities.
Ability to build a portfolio here
For investors, I emphasize in the importance in building a portfolio and not just 1 property (put all eggs in basket). For many first time investors, they never thought about building a portfolio before until they came to Dallas. The portfolio approach is very different from holding a single rental property, and I will discuss about that in my other series “How to be a portfolio investor in USA”. In short, you can buy properties from $60,000 to $800,000 in Dallas, most of my investors tend to hold between 3 to 5 properties and spread across different types of assets and locations for diversification and strategy.
About Thomas Su Group
Thomas Su Group is licensed through Keller Williams Preston Road Dallas office. Thomas Su Group specializes in helping international and interstate investors buying in Dallas areas. Its clients include investors from Australia, Canada, China, Hong Kong, Taiwan, Great Britain, Saudi Arabia, Latin America and India. We have also helped interstate clients from California, New York, Illinois, Oklahoma, Michigan, Florida and Georgia.
PLEASE CONTACT US IF YOU ARE INTERESTED IN BUYING OR LISTING PROPERTIES IN DALLAS, TEXAS
Thomas Su – Realtor (English & Chinese)
Thomas Su Group
Keller Williams Realty Preston Road
Email: rwp1688@gmail.com
Phone: (469) 347 1839
Denise Gonzalez-Rubio (English & Spanish)
Realtor
Keller Williams Realty Preston Road
Email: denisegrubio@kw.com