Looking to get some advice as I am struggling with understanding if I am failing to look at the big picture and overall being too conservative with investing in RE. I realize this is BH but we have a lot of folks that hold multiple asset classes.
A few friends went in and each bought new construction SFH ($350k plus 20% down) in the DFW area specifically West Forth Worth (providing this info for anyone that knows the area) with the hope to make money of appreciation as the properties are negative cash flow if only considering PITI, and prop management, this does not include vacancy or anything else. Given new construction maintenance should be minimal as there is a warranty for the first year. The property will be cash flow negative estimating around 300-400. Rent estimate $2,200, PITI $2,500 prop mgmt $100. Once interest rates comes down and rents go up maybe breakeven or cash flow positive in 3+ yrs but property taxes in DFW are very high as well. Not sure how long they will hold for let’s assume 6-10 years or pass down to their kids, one mentioned that.
I decided not to pursue as the numbers did not make sense to me especially for new investors that don’t have 5+ other homes to leverage off. So the question is am I missing the appreciation wave that is still hitting the DFW area and being shortsighted by only looking at cash flow vs appreciation? Thanks
A few friends went in and each bought new construction SFH ($350k plus 20% down) in the DFW area specifically West Forth Worth (providing this info for anyone that knows the area) with the hope to make money of appreciation as the properties are negative cash flow if only considering PITI, and prop management, this does not include vacancy or anything else. Given new construction maintenance should be minimal as there is a warranty for the first year. The property will be cash flow negative estimating around 300-400. Rent estimate $2,200, PITI $2,500 prop mgmt $100. Once interest rates comes down and rents go up maybe breakeven or cash flow positive in 3+ yrs but property taxes in DFW are very high as well. Not sure how long they will hold for let’s assume 6-10 years or pass down to their kids, one mentioned that.
I decided not to pursue as the numbers did not make sense to me especially for new investors that don’t have 5+ other homes to leverage off. So the question is am I missing the appreciation wave that is still hitting the DFW area and being shortsighted by only looking at cash flow vs appreciation? Thanks
Statistics: Posted by amindu — Mon Jan 01, 2024 12:05 pm — Replies 3 — Views 403