Cap rates of 7-10% are VERY common (you could throw a dart and probably get this). If you are working with someone who is experienced in investment properties, you should be able to find cap rates of over 10%. I am working with an investor right now to pick up a multifamily property that should yield about 18% cap rate if our offer is accepted as is.

Your return on investment depends on several factors including:
1) Cash purchase vs Borrowing
2) Turnkey vs Fixer-Upper
3) If you plan on managing it yourself or hiring a property management company
4) What area of Dallas

Frisco typically has low cap rates while areas of Richardson, Plano, and Addison tend to have higher cap rates. If you are able to purchase and rehab, the Carrollton area has some great properties.

If you have any questions for me, I would be happy to answer them. Please email me at Brian@Rayl-Estate.com or call/text me any time on my cell phone at 214-601-4192.

It's more than real estate. It's RAYL-Estate!

Brian Rayl
Keller Williams Elite
972-949-4222
Brian@Rayl-Estate.com
http://BrianRayl.com

Dave,

Lots of good answers. However, I would simplify it even more. Cap rate is a number that you as an investor will decide on as to what is acceptable. If you want a 8-10 cap, then it is a matter of finding the property...or properties...that will produce that based on your exit strategy. Generally speaking, your cap rate will be an average of all properties as they are divested. So it is sort of a floating number. And I guess the most important concept to really understand is that investors don't buy property...they buy cash flow. The property is simply a means to the end. So to limit yourself to a particular property type of geographic area will really limit your opportunities to meet your objectives.

This is an exciting market for investors. But even though we are still seeing downward pressure on price, our inventories have also shrunk. It may take analysis of 100 properties to find the one that makes sense.

Hope this helps. Please feel free to ask further questions via Trulia Voices or to me directly. I will be more than happy to help in any way that I can. I also have several highly skilled agents in my office that specialize in investment proeprties.

Thanks again for using Trulia Voices.

Alan Wynn - Branch Manager
Coldwell Banker Residential Brokerage
North Dallas Regional Office
214.729.5582 (cell)
alan.wynn@cbdfw.com

Dave,

CAP rates will depend on what you want to invest in and where you want to invest.
In the end I think it is not all about CAP rates as some books and classes will have you to believe.
For example it does not take into account your thoughts for future appreciation. As a general idea I
might say 8-10%, but again it depends on the property and area and type.

Condos rarely work as good investments. As others have mentioned long term resale can be an issue.
Normally it's the HOA dues that kill the return. You end up paying for things that your tenants enjoy, like a pool, streets, fences, club house, and perhaps security or a concierge, that provide you with little or no return.

There are probably only a handful of exceptions I can think of around Dallas and even those I don't recommend to everyone.

I am an investor myself and very picky about what I recommend. I've seen lots of different strategies work, but I think what I see that works best now for a new investor is single family, often foreclosures, less than $150,000 3/2/2 that rent for $1000-$1500/month. Again very general info, but we try to take from the best investors.

If you would like to talk more about it give me a call and lets see what works for you.

Hi Dave,
My husband and I have invested in condos in the Frisco area. We have also purchased condos for our kids while in college. There are a number of options. In the condo market, it is very important to understand what the HOA fees are--they can really eat into the cash flow! In addition, lenders don't like the rental ratio in a condo development to be too high. I agree with Jay that there aren't enough upper-level single family homes available for lease right now--that's a hot market at the present time. I work all over the metroplex and particularly in Frisco, Allen, McKinney, Plano, North Dallas and have also had condo transactions down hear SMU--a great location! Let me know how I can help!
Susan
Your Home Is Where My Heart Is!

Well Dave - based upon your question I assume you live in the 75248 zip code, which is FAR North Dallas.
North Dallas is South of LBJ. Far North Dallas is North of LBJ. You need an agent that is knowledgeable for the area that you are talking about. I am with the Keller Williams office at Preston Rd. and Frankford - very near you. We have hundreds of agents in our office that work in this area and just North in Collin County.
It all really depends on what "specific area" of North Dallas you are wanting to invest in.
You've got Bluffview, Devonshire, Preston Hollow, Russwood Acres, Prestonwood, and lots of other neighborhoods.
The cap rates are going to depend on your price point to a large extent.
Are you looking for single family ? Duplexes ? Condos ? Townhouses ?
How much do you want to invest - are you going to improve the property or not - etc etc.
The timeline you are considering the investment holding period - all of these are critical questions.
As other agents have mentioned - the competition for good investment property is FIERCE.
Everyone wants rental properties - fortunately the market is strong as many people are
looking to lease - particularly high quality single family homes - in the $ 2000 to $ 4000/month range.
I represent numerous clients and it's hard to find these properties - there just aren't enough out there !
If you'd like to discuss it further - please contact me - my office specializes in North Dallas and I'd be
happy to help you.

Best wishes -
JAY NAREY ABR, ALHS
Keller Williams - Preston Rd.
jaynarey@kw.com

Multi-family real estate is one of the best in Dallas. I am a partner in a company and we currently have 1300 units.
When it comes to cap rates, it all depend on the deal.
if you have any questions, please email at anna.kemp@cbdfw.com
I have 5 years of investing experience. I am investor first, real estate agent second and that is very important when it comes working with investment real estate.

We are looking at condos as investment properties,

Cap rate varies from property to property of course, in theory the more distress a property has the higher the cap rate should be, but that's not always true... The most important thing is to work with an agent who will help you find good deals and make offers quickly as the best deals rarely last more than 24-48 hours and frequently have multiple offers. In July, I personally picked up a condo with a 45% cap rate. That's not typical and most people aren't looking for condo's but it fit my investment criteria, so it was a good deal for me.

If you would like to work with an agent with personal experience in investing, please contact me at 817.773.0171 (cell) or at alan.eoff@gmail.com

Thanks,
Alan

You will find cap rates from 8% to 10% in good areas on turnkey investment property. Here are a few examples: http://www.noradarealestate.com/Real-Estate-Investments/Texa…

Feel free to contact me anytime with any questions.

Marco Santarelli
(800) 611-3060 x3

What type of property commercial ? Apartments ? or single family homes ?

Lynn911 Dallas Realtor & Consultant, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com