Are you considering investing in real estate? Real estate investing is considered one of the best and most profiting investing. It has good potential returns on investment. It is almost impossible to go at a loss when you invest in real estate. Let’s discuss Real Estate investment Dallas.
Most people that want to invest in real estate are faced with the dilemma of finding the right location or area to buy properties. Purchasing a property in a wrong location can lead to a loss or a low return of investment.
Knowing the cities with good prospects and with potentials to maximize profit is very important. This is why before investing in any property, you should first make adequate research to know which area and cities with potentials to maximize good returns on investment.
Dallas real estate market is booming with great returns on investment. It is a market where you should very much consider investing on. Dallas real estate market has grown in recent times both in the increase of population and economic growth.
Dallas is a city where around 600 people relocated into every day. This shows a great opportunity for property investment as people will need homes to live in. Dallas is a choice location for a lot of people and this has made the city a great investment hub for property investors and home buyers.
5 reasons to invest in Dallas Real Estate Market
Dallas is home for both locals and foreigners. It is a choice location for a lot of people. The growth of its population and economy has made it a seller’s market for real estate. Investing in real estate in Dallas is a good choice you should make.
Let’s take a look at some of the reasons why you should invest in real estate in Dallas:
Tax payment on properties is one of the factors that can drive away investors from investing in properties in a particular location. Investing in real estate in Dallas reduces or eliminate taxes on properties.
Investing in properties and treating your investments as a business will enable you to eliminate expenses you would have incurred. Expenses including property taxes, travel fees, and repair costs can all be eliminated.
You can also avoid paying capital gains taxes on properties with 1031 exchange. It allows you to purchase like-kind property with the proceeds from the sale of another property. Buying properties with 1031 exchange helps to eliminate the payment of taxes on properties sold.
Buying properties in an Opportunity Zone allows you to defer payment of capital gains taxes.
Population Growth and Economic Growth
Dallas is growing at a fast pace with about 600 people relocating to Dallas daily. Dallas is the 4th most populous metropolitan area in the United States.
It is expected that 50,000 new single-family homes and 50,000 new apartments will be built in Dallas County in the next three years.
With a 4% annual economic growth over the past years, Dallas has experienced a significant increase in population. Dallas had its roots in small-scale farming which has been boosted by oil business.
It has become an urban cultural and business center. Dallas real estate market is expanding daily, which is why more homes are needed to accommodate its populace.
Dallas is fast becoming a hub for business and as more people are relocating to the city, more homes are needed which is very beneficial for real estate investors.
Job markets and high employment rates
Dallas has been ranked 2nd in the job market growth in the United States with over 500,000 jobs created over the recent years. The average salary in Dallas is rising to about $60,000 annually. This has resulted in the financial stability of people living and working in Dallas.
The high rate of employment, good economy and financial strength of its populace has made the city a great location for real estate investment.
With a GDP of about $450 billion, Dallas is ranked 6th in the best GDP in the United States. With people having good jobs and earn better wages, they can buy properties and pay rentals. They can spend more money on buying properties from investors.
Availability of jobs in Dallas helps to create a good economy and it is expected to increase in the future.
Dallas is ranked at 1st in the overall commercial real estate demand in the United States. This means that the demand for properties both commercial and residential is very high in Dallas.
High rent to home price ratio
The ratio of the residential rental to home prices in the Dallas housing market is 16:1. This means that in 16 years, a property owner can get full return on the value of his/her property.
This is the highest-ranked property return in the United States. Also, the selling prices of commercial properties such as industrial, retail and offices all cost above the normal rates in Dallas.
Growth of Airbnb
Airbnb (Air bed and breakfast) is an online-based market for renting properties. Foreigners, immigrants, and people relocating to Dallas can rent properties and accommodations through the platform.
On bookings, it takes a 3% commission and the balance payment goes to the homeowner. A lot of people uses the platform and Airbnb has recorded remarkable growth in Dallas over the years.
The growth of Airbnb has indicated that a lot of people are moving into Dallas and they need accommodation. Dallas is among the cities with the highest vacation rental services.
Hence, as a property investor, it will be wise to invest in property in Dallas due to the high demand for accommodations to rent. The value of your property will continue to rise due to the increase in demand.
Dallas Real Estate investment returns and growth
The median value per square foot of homes in Dallas is $205, which is higher than the Dallas-Fort Worth-Arlington Metro average of $137.
The median cost of homes right now recorded in Dallas is $379,900. The lease cost in Dallas is $1,618, which is lower than the Dallas-Fort Worth-Arlington Metro median of $1,695.
Dallas housing market in 2019 is one of the strongest markets in the United States. In spite of certain changes in the market, demands and sales have kept on moving at a high pace for over two years with no indications of halting.
Dallas real estate market figure for the year ending with the third Quarter of 2019 is certain. This is according to LittleBigHomes.com. The Accuracy of the Trend Projection for Dallas is 82%.
In like manner, they estimated the likelihood of rising home costs in Dallas at 82% during this period. If this Dallas Housing Market Forecast is right, home costs in Dallas will be higher in the third quarter of 2019 than they were in the third quarter of 2018.
Dallas housing market for the next 3 years ending with the third quarter of 2021 is also positive. The Accuracy of the Trend Prediction for Dallas is 76%. It is estimated that the probability of rising home costs in Dallas is 76% within this period. If this is correct, home values will be higher in the third quarter of 2021 than they were in the third quarter of 2018.
2018 was extraordinary for the Dallas real estate market in terms of increment in the value and prices of homes. This pattern is required to continue in 2019. As indicated by Zillow, home estimations in the Dallas-Fort Worth-Arlington Metro became 14.3% over the previous year. Besides, Zillow predicts that costs will yield another 11.2% the next year. In this manner, if you invest in property now, your investment will yield significant profit in the next year.
What’s more, recollect that the Dallas housing market is anticipated to have an increasing rental demand. This is going to drive up rental costs, hence making your investment more profitable.
As indicated by Mashvisor’s data and analysis, the median home cost in Dallas is $423,768. This cost is above the United States national value. However, it is reasonable as Dallas is one of the top real estate markets in the United States.
Comparing with the real estate market in Los Angeles ($932,371), Miami ($663,700), Boston ($855,693), and Austin ($518,686), the cost is relatively lower in Dallas.
How to Invest in Turnkey real estate in Dallas
Turn-key real estate investing in Dallas is a way to invest in real estate and minimize investment risk.
Turn-key real estate investing is when you buy a property that doesn’t require additional investments, already has a paying tenant, and likely has ongoing management. It means investing in an already-made property where you don’t need to incur extra expenses in renovations and management of the property.
Investing in Turnkey real estate in Dallas offers many benefits and reduces investment risk or losses.
When you invest in Turn-key real estate, you most likely have income already coming in on the property. A Turn-key property most likely already have a tenant. This means that when you purchase a property, your tenant pays a significant part or all of the mortgage for you.
For example, you purchase a property for $200,000 and your mortgage is $1200 per month. If you have a tenant already occupying the property and pay monthly rentals of $1,200 or $1,000, this means you don’t get to pay the mortgage with your money or you only pay a little amount of the mortgage.
Investing in Turn-key real estate in Dallas offers you more control over your investment. You can either choose to manage the property by yourself or hire a property management company to manage the property on your behalf.
Before you invest in Turn-key properties in Dallas, you need to first make adequate research. You need to know the Dallas home buying process.
We will show you steps to guide you through the purchasing process of buying a Turn-key property in Dallas.
Step 1: Determine your housing needs and budget
Before purchasing a property, you need to determine your needs and know the kind of property you want. Have a list of the size of property you want, the facilities and nature of the property.
Also, your budget is very important when investing in properties. Your budget will determine the size and nature of the property. If you want a bigger-sized house or a luxury home, you should expect a higher budget.
Step 2: Get pre-approved for a mortgage
Get pre-approved for a mortgage to find out what price or cost of a property you can afford. Meet with the right lender and provide necessary financial documents so they can estimate the mortgage amount that you can afford.
Step 3: Meet the right real estate agent
When planning on purchasing a turn-key property in Dallas, you must find the right real estate agent. The right real estate agent will help you through the process of finding a good property and guide you through the purchase process.
The right real estate agent will make your investment process as easy as possible. A good real estate agent will likely recommend a good mortgage lender to you and walk with you through your investment journey from the beginning to the end.
Step 4: Begin your property search
Searching for the right property to buy in Dallas requires a lot of research. You can search through reputable property listing online. Check different property listings in Dallas for your choice property with the features you want and within your budget. You can also sign up on these property websites to get alerts and notifications for available properties that fit into your desire and budget.
If you do not have the time or experience in searching for the right properties, you can make use of a reputable real estate agent. Your real estate agent will show you different properties that fit into what you want and your budget. To be on the safer side, it is best to use a reputable real estate agent when searching for a property to buy in Dallas.
Step 5: Inspect the property
After finding a property you want to purchase, you must go inspect the property. This is to make sure that the property is actually what it is in photos. It is also necessary to inspect properties so you don’t fall into the hands of scammers. You need to be sure that the property is real and in good condition.
Step 6: Make an offer to buy the property
After negotiating the price with the property seller, make the seller know that you are serious about purchasing the property by making an offer. You can deposit some amount of money upfront or into an escrow account. You should also have your mortgage pre-approval letter ready to show to the seller.
Step 7: Fill out Paperwork
Fill out all the paperwork that legally binds the purchase contract. You may need the services of a legal practitioner to sign the papers and to ensure that all paperwork is authentic and binding the contract. Your real estate agent can also help you handle all the paperwork.
Step 8: Finance your property
This is where you provide a financial plan on how you will pay for the property. Determine the amount you want to pay for your mortgage monthly. The mortgage lender may calculate the amount you need to pay every month or you can calculate your monthly mortgage payments based on the amount loaned, number of years and interest rate.
Step 9: Closing
After you have signed all the paperwork and financed the property, you have secured ownership of the property. You may need to hire a property management company to manage the property for you or manage the property by yourself.
1031 Exchange Real Estate Investment in Dallas
To prevent paying tax on capital gains on investment properties, you can purchase like-kind properties in Dallas using 1031 exchange.
1031 exchange is a tax exemption rule granted in the IRS tax code that states that individuals can defer pay capital gain taxes or other taxes associated with the sale of a property if the proceeds from the sale of the property is reinvested into the purchase of a like-kind property of equal or greater value within a limited time frame, usually within 180 days.
If you sell an investment property and use the profit you made from selling the property to purchase a like-kind property, you can defer paying capital gains tax on the profits made.
For example, if you purchase a rental home for $200k and after some years you sold the property for $500k, you have made a profit of $300k. Under the 1031 exchange rule, if you use the $300k profit to purchase a like-kind property within the time limit, you won’t have to pay capital gains tax on the profit.
1031 exchange has rules binding it which includes:
- The property must be an investment property. You can’t purchase a property for private use
- You must hold ownership of the property of at least a year
- The properties sold and bought must be like-kind
- You must buy another replacement property within the 180 days’ limit.
- You must identify another replacement property to buy within 45 days after selling the original property.
- Both the original property and the like-kind property must be sold and bought in the same name.
- All the profits made from selling the original property must be used to purchase the replacement property.
Medical Real Estate Investment Dallas
Investing in medical real estate in Dallas has become an increasingly profitable investment.
Investing in medical real estate in Dallas is probably the most brilliant move you can make today as an investor.
In addition to the fact that healthcare is a service everybody needs, it’s likewise a part sponsored by statistic development. Consistently, 10,000 Americans turn 65.
In several years to come, aging Baby Boomers will need more specialty housing and medical facilities This implies that the healthcare sector must continue to grow no matter the situation of the economy.
Investing in a medical real estate creates a completely passive investment profit. The tenant of the property is completely in charge of the management and ownership costs of the property.
Long-term leases of the property are backed by a regional hospital’s financial strength which helps to reduce investment risk.
A report from JLL stated that medical office has consistently offered a 2% spread in cap rates over other risk-similar investments.
Where medical offices are offering median cap rates of 6.7%, other offices and the S&P 500 Dividend Yield are offering cap rates of 4.2% and 3.0% respectively. This means that investors make more profits investing in medical properties.
Investing in medical real estate in Dallas has become increasingly profitable and irresistible to investors. As an investor, investing in medical real estate in Dallas is a profitable investment.
To go into medical real estate investment in Dallas, look for a reputable real estate agent that specializes in the business of healthcare and healthcare real estate in Dallas.
The real estate agent will guide you through the process of searching for a good medical property to buy, financing and legal documentations.