Dallas Ranked No. 1 Place To Buy Rental Property In Study

From American Real Estate Investments: Business Insider ranked Dallas as the best place to buy a rental property. In cooperation with HomeUnion, Business Insider examined everything from the projected positive cash flow to the local economies to a detailed analysis of the local real estate market. The conclusion? Dallas is number one.

Investing in a rental property is distinctly different than owning a home or doing a fix and flip. Rental properties are a long-term investment. They need specific market conditions that minimize the risk of vacancy and maximize cash flow and appreciation.

Business Insider and HomeUnion found that the Dallas rental market offered a 5.6 percent return on investment; somewhat less than the stock market average return but considerably less volatile. They based their results on the median home price and median mortgage payment for a 30-year fixed rate mortgage, with a 20 percent down payment and 5 percent interest rate:

Dallas Figures:

• Median investment home price: $199,300
• Mortgage payment: $856
• Median rent: $1,630

While a market like Miami might bring a higher annual return, Dallas has stronger economic growth and real estate appreciation, making it the top place to buy a rental property. The metro area boasts a 6.2 percent three-year population growth and 3.9 percent job gains over the last year. The absence of personal and corporate income taxes makes Texas a business-friendly state for corporations and employees alike.

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In addition to a 9 percent average annual growth in all single-family home prices, the Dallas real estate market is also one of the fastest growing for pre-owned homes. Pre-owned home prices are up as much as 24 percent in many areas as renters and buyers flock to the business-friendly state from other less appealing markets. With rumors of Amazon considering DFW as the location for their next corporate headquarters, this could be just the beginning of growth in Dallas.

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