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As it turns out, tenants-in-common arrangements may become the subject of 1031 exchanges. If you’re a real estate investor considering using your tenants-in-common property in an exchange, it’s helpful to know the specific 1031 exchange rules.

 

Which Suburban Areas Near Dallas, Texas Are Best for Investment in Multifamily Real Estate?

Jun 06, 2017

Suburban life has a unique significance for us as Americans. The size of our country allowed us to develop neighborhoods (suburbs) that were close to our dense metropolitan areas but did not include many of the irritants of city life. For many of us, suburban living is the ultimate “win-win” scenario: Suburban dwellers have easy access to the big city for work and pleasure, and also an easy escape hatch whenever they want to avoid the drawbacks of urban life. Most people outside of the United States don’t have this luxury, and so suburban living is seen by many as a distinctly American phenomenon. 

Because suburban life has so much to offer its residents, it naturally draws a lot of attention from investors. Right now, many suburban areas around the country are experiencing substantial population growth, and plenty of these areas are located in Texas. In the greater Dallas (and Fort Worth) metropolitan area, a number of suburban locations are currently seeing very healthy growth, and this is partly explained by Dallas’ relatively healthy job market.

As these Dallas suburban areas continue to grow, you and other investors should have the potential for good investment opportunities as these new residents seek housing. Let’s explore a few specific suburban areas in detail to show exactly why they show promise as investment opportunities.

Frisco and McKinney: The Fastest Growing Suburban Areas in the Dallas Area

When you look for signs of whether or not a given area is a good option for investment, population growth is among the top signs you should notice. To be sure, there are a variety of factors that make up the desirability of a given property, and having a larger pool of prospective renters doesn’t guarantee success, but as a general matter, an area that shows population growth has an edge over areas which show declining numbers.

With a growth rate of 5.3 percent, Frisco is among the fastest growing areas in the United States. The growth in population is linked to the state of Frisco’s job market. Frisco has experienced an exceptionally high rate of job growth in the past year. Dallas as a whole has also seen considerable job growth—Dallas saw a job growth rate of 3.9 percent in 2016—and so Frisco’s population growth can be partly attributed to its proximity to Dallas.

Along with Frisco, the Dallas suburban area of McKinney has also experienced substantial growth in recent years. McKinney saw an impressive population growth rate of 3.9 percent between 2012 and 2013. What’s more, McKinney has received favorable rankings for a range of metrics, including affordability, job growth, and also its suitability for starting a family.

McKinney was ranked as the second most attractive real estate market in the country by WalletHub. NerdWallet ranked the city number 11 (out of 448) among the best places in the United States for first-time home buyers, and ApartmentList ranked McKinney number 38 (out of 500) among the best cities for families. Though its growth rate has not been as impressive as Frisco’s lately, it still shows plenty of signs of being a solid choice for multifamily real estate investment.

Richardson and Plano Show Promising Signs for Dallas Investors

Along with Frisco and McKinney, two other suburban areas also show considerable promise as opportunities for investment: Richardson and Plano. Like Frisco and McKinney, Richardson has a relatively healthy job market—its current unemployment rate is approximately 3.9 percent, well below the national average of 4.4 percent (as of April 2017). What’s more, Richardson has also seen steady population growth in recent years. During the period from 2010 to 2014, Richardson experienced an average population growth rate of 2.3 percent.

Plano likewise shows indications of being a good opportunity for investment. According to a recent study, Plano ranked second in the United States among the top cities for jobs in 2017. Consistent with this study’s ranking, Plano has also witnessed significant corporate relocation in recent years. For instance, Liberty Mutual relocated to Plano in 2015 as well as Toyota’s North American headquarters. This corporate movement increases access to well-paying jobs and, therefore, increases the ability of prospective tenants to consistently meet their financial obligations.

Multifamily rental complexes need many things to flourish. Two indispensable ingredients are people and money. If a given area lacks a sufficient pool of prospective tenants, or if it lacks economic opportunities for residents in the community, your rental complex will see its odds of success go down. Both Richardson and Plano appear to have these essential ingredients.

Population Growth Is a Key Factor Underlying Multifamily Real Estate Investment

As we’ve discussed in the past, it’s important for investors to pay close attention to population trends. The logic behind this is pretty straightforward: If a region experiences population growth, this means that there is a larger pool of potential tenants to draw from. What’s more, a larger population also means that there will potentially be greater demand for multifamily housing, and basic economics tells us that greater demand translates into higher rents (and therefore greater returns).

Given the current statistics of Frisco, McKinney, Richardson, and Plano, these areas will likely be among the best opportunities for multifamily real estate in the near future. These areas show promising signs of job growth and corporate development, so you as an investor should give these signs due consideration when you make your investment decision.

At CWS Capital Partners, we specialize in helping investors find the perfect multifamily real estate investment for your portfolio, and we have years of experience working in the greater Dallas metropolitan area. Contact us today to learn how we can help you select the best investment opportunity and manage it for you so that you receive the best outcome.

 

The information provided here is for your general informational purposes only. It should not be considered a recommendation or personalized advisory advice. CWS has made this third party information available from authors it believes are knowledgeable and reliable resources. However, its accuracy or completeness cannot be guaranteed and sentiment may change due to legal or economic conditions.

All investments involve risk including the possible loss of principal. You should familiarize yourself with all risks associated with any investment product before investing.

Advisory services are provided by CWS Capital Partners LLC, a registered investment advisor.

Securities offered by CWS Capital Partners LLC are through an affiliated entity, CWS Investments. CWS Investments is a registered Broker Dealer, member FINRA, SIPC.


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