When choosing where to invest in real estate, there are numerous factors that you should consider, like home price trends, rental prices, the population, and more. If you want to have the best of all worlds in 2019, consider investing in Dallas real estate. Located in North Texas, Dallas has been and remains to be a popular choice for property investors. In fact, both local and international investors in the US housing market find that buying rental properties in Dallas makes for a smart investment. Why is that? Explore the Dallas housing market 2019 to learn why it should be on your list of places to invest in this year.
Dallas Housing Market Named #1 Market to Watch in 2019
Every year, PricewaterhouseCoopers (PwC) and Urban Land Institute (ULI) publish their Emerging Trends in Real Estate® survey report, a highly regarded market forecast for what’s to come in the real estate and land use industry. The report is mostly highlighted by its “Markets to Watch” list of the top cities to own an investment property. This year, Dallas came in at the #1 spot, not only in the region but also nationally, and for good reason.
Chief economists of the report describe Dallas as “an interesting market, one with the potential for strong future growth but also with the liquidity of a gateway market.” Moreover, there are many factors driving the demand in the Dallas housing market, but inventory is barely keeping up. This creates the perfect opportunity for real estate investors looking for profitable investments in the medium and long-term.
To discover which cities also made it on the list, read: 10 Best Places to Invest in Real Estate in 2019
If you’re still skeptical, let’s delve into these factors that are driving the strong real estate market and five main reasons why you should start looking for a rental property for sale in Dallas.
1. Strong Demand for Rentals
When you’re buying an investment property, you want to invest in a place where people want to live. This will translate into a high demand for rentals. Experts believe that the Dallas housing market 2019 will definitely have a strong rental demand. According to the Dallas Business Journal, the population in the city area is expected to grow more than twice the national average this year. As every real estate investor knows, large population means higher demand.
In addition, the price to rent ratio in Dallas is 19, according to Mashvisor’s real estate analytics. Experts consider this a high ratio which indicates that it makes more financial sense for people to rent rather than buy a house. As a result, the majority of Dallas’ population are looking for properties for rent rather than homes for sale, which means strong rental demand for real estate investors.
But which property types are most profitable in the Dallas housing market? According to data from RentCafé, larger 3-bedroom rentals will bring the highest rental income ($1,432). While other types rent for less, they still make for a smart investment. This is because, as increasing mortgage rates drive down affordability, more and more people (especially millennials) are going to be renting. These young people are more likely to rent studios, 1-bedrooms, or 2-bedrooms rentals. Thus, property investors can expect to see major growth for those types of rental properties in 2019.
You can use our Property Finder to find lucrative investment properties of any type that match your criteria in a matter of minutes!
2. Reasonable Property Prices
2018 was great for Dallas real estate in terms of increasing home values and prices. This trend is expected to continue in 2019! According to Zillow, home values in the Dallas-Fort Worth-Arlington Metro grew 14.3% over the past year. Furthermore, Zillow predicts that prices will grow another 11.2% this year. Thus, if you invest now, your investment property should appreciate significantly! In addition, remember that the Dallas housing market is predicted to have a strong rental demand. This is going to drive up rental prices and, thus, make your investment even more profitable.
According to Mashvisor’s data and analytics, the median home price in Dallas is $423,768. While this is above the US national value, it’s a reasonable price considering Dallas is one of the top real estate markets. It’s also relatively affordable compared to properties in other hot housing markets like Los Angeles ($932,371), Miami ($663,700), Boston ($855,693), and Austin ($518,686). Therefore, Dallas investment properties present great opportunities for investors looking to invest in a hot market on a budget.
Related: How to Invest in Real Estate on a Budget and Still Make Money
3. Labor Market and Job Growth
As mentioned, real estate investors should look to invest in markets experiencing a growing population. Population growth is typically linked to job market growth as people move to cities with plenty of job opportunities. Historically, Dallas has been one of the most important centers for the oil and cotton industries. The city is also known for its business-friendly environment (lower cost of doing business, lower property taxes, and fewer business regulations), and the lower cost of living for employees.
Therefore, it’s no surprise that many companies from cities like San Francisco and Los Angeles have targeted Dallas as a prime spot to relocate. In fact, a number of major employers have already moved to Dallas in recent years, including Toyota, Facebook, and Keller. This has had a positive impact on the Dallas housing market as it’s driving the economy, creating new jobs, and attracting a high volume of new residents!
These new residents are increasing the demand, which is great for those thinking of investing in real estate. This continues to increase both the rental price and the value of your investment property. Meaning, you have the opportunity to reap a good return on investment – both in the short-term and long-term!
4. A Choice of Rental Strategies
If you’re buying a property to rent out, you have two rental strategies to choose from. You can either rent it out traditionally (long-term) or as a vacation rental on Airbnb or a similar site (short-term). Real estate investors determine the optimal rental strategy based on a number of factors including short-term rental laws and regulations, occupancy rate, and which generates a higher rental income.
Related: Airbnb vs Traditional Renting: Which Rental Strategy Yields Higher Rental Income?
The good news for a Dallas real estate investor is: You can rent out your property with either strategy and get a good return on investment! However, it depends on where you buy a rental property. So, if you choose to invest in traditional rentals in the Dallas housing market, Mashvisor’s data suggests buying property in South Dallas. This neighborhood has a:
- Median Property Price: $138,470
- Price/Square Foot: $104
- Traditional Rental Income: $1,136
- Price-to-Rent Ratio: 10
- Traditional Cap Rate: 3%
On the other hand, investing in Airbnb vacation rentals might be your preferred strategy for making money in real estate. Indeed, data from Mashvisor’s Investment Property Calculator confirms that vacation rentals are the optimal strategy in the Dallas housing market 2019. This is because they yield a higher return in terms of cap rate. So, if you want to buy Dallas investment property to rent out on Airbnb, then consider these two neighborhoods:
North Dallas
- Median Property Price: $744,192
- Price/Square Foot: $255
- Airbnb Rental Income: $4,229
- Airbnb Occupancy Rate: 55%
- Airbnb Cap Rate: 3%
Dells District
- Median Property Price: $277,959
- Price/Square Foot: $180
- Airbnb Rental Income: $2,275
- Airbnb Occupancy Rate: 57%
- Airbnb Cap Rate: 3%
To start looking for and analyzing the best investment properties in your neighborhood of choice, click here.
5. High Real Estate Appreciation
Smart real estate investors always ensure they are buying rental properties in the best locations that will give the best return on investment for years to come. In addition, a time will come when you’ll decide to sell your investment property and maybe buy another one to grow your portfolio. This is why you should always think of real estate appreciation when making an investment decision.
As mentioned above, demand in the Dallas housing market is high but inventory is not keeping up. When there’s little supply of properties in the market, the value of your existing investment property will only go upward! This is great for property investors looking for real estate investments that will appreciate in value in the coming years. As a matter of fact, Dallas has a track record of being one of the best markets for long-term real estate investments in the US.
Related: How to Calculate Real Estate Appreciation
In the last 10 years, Dallas has experienced some of the highest appreciation rates in the nation. According to NeighborhoodScout “Dallas real estate appreciated 59.88% over the last ten years, which is an average annual home appreciation rate of 4.80%.” This puts Dallas in the top 10 cities with the highest real estate appreciation rate in the US! Therefore, if you’re an investor buying a rental property in the Dallas housing market 2019, you’ll definitely profit from both rental income and long-term appreciation.
Invest in the Dallas Housing Market 2019
The Dallas housing market experienced major growth last year, and that growth is expected to continue in 2019. For property investors, now is an ideal time to make a purchase. As home values and rent prices continue to rise, investment opportunities are only going to get better! Ready to start searching for investment properties in Dallas to make money in real estate? Start out your 14-day free trial with Mashvisor now and use our tools to find the right property in the right area with the help of predictive analytics.