Ah, Dallas. City of layovers, the Cowboys, and poor cash-flow.

Now before some real estate boomer starts raging about how much they used to cash-flow in Dallas back in 1993, let me qualify my statement: if you're looking for your first investment property in 2023, it's going to be very hard to make a deal work in Dallas. That said though, here at Coffee Clozers we always say that it doesn't matter if the city has horrible cash-flow as long as you can find one deal that works - so here we go, and may God help us. In this blog post we'll discuss 4 neighborhoods that you should consider looking into, but be forewarned, there's likely going to be some lowballing involved.

Welcome to the world of high property taxes and lax landlord legislation.

Top Neighborhoods for Investment

1. Ledbetter Gardens Whilst this neighborhood is technically in the middle of nowhere with no amenities within walking distance, it has great access to Interstate 30, which can get you wherever you need to be. On the topic of cash-flow, the area is by no means fruitful, but is also not awful by Dallas standards. Over the past year, we've seen a significant minority of deals that are nearly hitting the break-even point, with the remaining majority lying firmly in the red. Whilst it may not be the most promising location for real estate investing, its strategic position near a primary interstate can't be ignored. For investors who are able to secure a decent deal or willing to hold for long term appreciation, Ledbetter Gardens could still potentially offer some hidden gems. At the moment we're seeing a median sale price of $344,000 with a YoY appreciation of 19.2% between Sep. '22 - Sep. '23 according to Redfin. And hey, if you can land those levels of appreciation, that's nothing to be ashamed of, but it's going to require some searching. A common theme for newbies here is that unless you get lucky, a good deal in Dallas is going to require one of three things:

• Choosing a breakeven deal, but staying for the appreciation;
• Going off-market for a property you can creative finance;
• Putting in a stack of quasi-offensive lowball offers that p*ss a lot of people off (either you do it, or someone else will!)

2. Highlands of McKamy Although this area sounds like it belongs in a Scottish folk song, it's actually in Dallas. Now granted it's even further north than what google maps refers to as "Far North Dallas", and is in fact closer to Plano than downtown Dallas, but that's neither here nor there. What you have to understand about the market here is that it's as up-and-down as Bitcoin. There are many gorgeous $700k - $800k houses in this suburb, but there's also a significant number of houses in the $350k range that could do with a little loving. Again, you can forget about cash-flow on an 8% interest rate, but with median home prices that keep doubling and halving every 6 months, this is absolutely worth looking into if your timing is right. Don't expect the specific property you buy to literally double in value within a year of course, but this place is textbook "find the worst house in the best neighborhood" kind of sh*t. In terms of location, the Highlands of McKamy are about as isolated from civilization as one can be in Dallas, but that's not necessarily a bad thing.

3. Northwood Estate Another place that caught our eye from an appreciation perspective is Northwood Estate. The median home price here stands at a somewhat comfortable $391k, but the real kicker is the staggering 25% year-on-year appreciation, a clear indicator of the potent investment opportunities it holds. If you're interested in knowing more about the community, it's a melting pot of culture and spirituality. Its close proximity to local churches and a Buddhist Temple adds a unique charm and serenity to the area, making it not just a potentially profitable investment, but a locale that enriches the soul. In terms of transport, the area has great access to Highway 75 that can take you downtown in 20 minutes.
4. South Dallas Drumroll please. Here we have our high-risk high-reward, cash-flow calf (it's not quite a cow) in the city of Dallas. This area encapsulates a bit of a raw, urban vibe, with its share of challenges, including a higher crime rate and some visible homelessness. However, it's an area on the rise with significant transformations underway, marked by an increasing number of house flips revitalizing the neighborhood. As you journey towards Owenwood, you'll notice the surroundings becoming increasingly appealing. While South Dallas may be a bit of a gamble, the potential cash flow is some of the best the city has to offer, making it a captivating choice for those keen to invest both now and in Dallas (..for whatever reason). Since the area is so close to downtown, you'll also benefit from the usual amenities that a big city has to offer. Don't feel like driving? South Dallas has good transport links to downtown via the Green Line. Ultimately our advice is that if you're going to invest here, try to find a good street.

Conclusion

If you're not willing to invest out of state, or for whatever reason you're set on Dallas, this guide can certainly help you navigate your options. As we've mentioned several times, there are many far better cities for cash-flow, but if you're willing to place a bet on appreciation, then hopefully we've given you some food for thought. Remember, real estate investment is not just about immediate returns; it's about understanding the potential of a locale, its future prospects, and how it aligns with your overall investment strategy.

Go Cowboys. (psych)