REI Newbie Starting Out

Hi Everyone,

I wanted to thank everyone in advance for answering my questions.

I currently own a small condo in the Dallas, TX area, fully paid off, but it’s not producing the kind of cash flow I was expecting, only 6% net rental yield and dropping due to HOA assessments. The neighborhood the condo is in is very good, close to high way, shopping and downtown, but doesn’t leave the condo a lot of room to appreciate in value as it’s in one of the older neighborhoods.

I am primarily interested in the buy and hold strategy, and with my experience with the condo, I am not sure if I should just sell the condo and look into quads or SFH as rentals, or keep the condo (since it is indeed producing positive cash flow) and just buy another property (such as a quad/SFH)? I am very concerned with selling the condo since I was told condos don’t sell that easily. I am also concerned with the exit strategy on a multi family since you can really only target another investor if you want to sell. I am not sure what the best plan of action is, any advice/comment would be greatly appreciated.

ps. Is Dallas even a good place to be doing passive portfolio building in the first place? Seems like people own more than rent over there …?

Hi. Welcome to the board!

If I understand this right, you have a condo paid off in Dallas but you live somewhere else… With small multi-family buildings, you can sometimes find someone who wants to try the landlording thing and live in one unit while renting out the others…but your right that your potential buyer pool will be more limited than with single family homes.

We don’t have any condos for rentals. I’ve always been a little leery of having something where an association can just assess charges when they want.

Depending on what your condo is worth and what price range of houses you would be targeting, you could try to sell the condo and leverage that money into a few properties.

If you’re far removed from the Dallas area, I’d consider doing rentals in your area unless you live in souther Cali and it’s really hard to cash flow in an area like that.

The rule of thumb is the cheaper properties will cash flow better, but you have to deal with more drama and crap from low-income folks.

Hi Justin,

Thank you for your reply, and you totally called it … I do live in SoCal now …

The condo was a personal residence turned rental when I got my new job and moved out to CA. As you might already know when I bought the place, I wasn’t thinking about ROI but rather how close the place is to everything else. I just thought it would be nice to get some passive income and let the place grow in value as time goes by. The more I learned about REI, the more I think it would be impossible with this unit, since the HOA includes utilities, the price is high and the rent in the area has capped off already.

I am looking to invest in Dallas because I grew up there and know the area well. I am primarily looking to buy houses between 75k to 150k with 10%-20% down and use them as rentals. I was thinking it might be a good idea to take equity on the condo to use as down payment (condo FMV currently at 60k)

Any thoughts/comments would be greatly appreciated!