EP 579 – The Dallas Real Estate Investment Market With Jer’Leigh Thompson

NCS 579 | Dallas Real Estate Market

NCS 579 | Dallas Real Estate Market

 

If you are interested in the Dallas market, it pays to talk to the right person, someone who knows the market in and out. Today, Scott Carson talks with Dallas-Fort Worth area real estate investor and realtor, and owner of Texcel Real Estate, Jer’Leigh Thompson, about the current state of the Dallas real estate market and what’s working for investors. Everybody can make money in an upmarket, but Jer’Leigh has been around since the last downturn in 2008, 2009, 2010, and 2011. She discusses the importance of getting deals that pay off and worthwhile buyers, and introduces us to ITIN buyers – including how they can benefit your business. Learn more about Dallas and how it is currently performing in the midst of the Corona pandemic.

Listen to the podcast here:

EP 579 – The Dallas Real Estate Investment Market With Jer’Leigh Thompson

As we know, the chaos of Coronavirus has thrown everybody in an uproar but we’re still rocking and rolling and knocking out episodes. I still want to make sure that we’re talking about the different markets out there. The different areas of the country that people love to live in and invest in. We know things are going to change. That’s why we’re excited about this episode. We’re going to be focused on the DFW market. Our special guest has lived through and been an investor not a couple of years. Everybody can make money in an upmarket but she’s been around since the last downturn, the last cycle in 2008, 2009, 2010 and 2011 and everything like that. We’re excited to have my friend Jer’Leigh Thompson. She is the Broker and Owner of Texcel Real Estate. She moved into real estate after a lifetime in the hospitality industry.

She’s made it through the last housing bubble. She knows firsthand how to pivot to survive. That’s why we’re excited to have her around here. It was that housing bubble that made her align herself with residential investors and learn to invest in her ventures. This led to becoming the originating broker for Propelio.com. You may be familiar with Ryan Harper and everything. You may see me over there. She’s a cohost of the Real Estate Divas with our friend Kristin Gerst as well. She is there at Propelio, which is the investor online deal management platform and education. We’re honored to have you join us from Dallas, Jer’Leigh. How’s it going?

Thanks for having me, Scott. I’m happy to be here.

We’re honored to have you here. You and I were talking beforehand. It’s a different market in this idea for this episode. How fast things can change? We’re both used to seeing it happen in the different real estate markets too though.

Maybe not quite at this lightning speed that we’re now on the beginning cusp of. I’ve been in the real estate market and dealt with when things have completely got turned upside down and you had to figure it out from the bottom up.

One of the great things is that we do have that experience. Instead of us diving in and going, “Here’s what we expect.” We can talk about where the market is currently. People are still buying and selling.

I still have deals that are working. They’re not backing out. They’re not saying, “That’s it. We’re done.” Thank goodness but we’re still going on trying to do business as usual.

Let’s talk about the market. Are you investing in Dallas or work with investors both in Dallas and Fort Worth and in the whole Metroplex area?

That’s how I got started was when things tanked is working with investors. I’ve found that more interesting anyway. I’m all over Dallas but wherever the deal is, where my clients are. Some of them have their little niche markets. Most of my stuff, I’ve tried to locate here in Arlington because that’s where I live and that’s where I’ve grown up. I decided after doing deals here and there that it’s better to keep it as close to home as possible. I’m still on all the platforms where people are announcing deals and saying, I’m interested in that deal. This is all moving fast. Dallas is a good market. We’ve had a lot of growth here. We had a lot of room to grow, whereas Dallas being in the middle of the country, we don’t see the highs and lows that both of the coasts see. When the bubble hit, it didn’t hit us as bad. A lot of people came here to take refuge from the disaster areas on the coast. We’ve benefited from that over these last growth years.

NCS 579 | Dallas Real Estate Market

Dallas Real Estate Market: Getting a deal that you think will pay off in the Airbnb-zoned area can definitely pay for itself.

 

That’s the truth. We were blessed in Texas. We didn’t take an as bigger dip. Some pockets around the state a little bit harder there. It leveled fine. We had our share of foreclosures and being in the market rebounded strong and gone from there and it’s done well. We’re both friends of Nicole Espinosa and she’s seen an increase in short sales in the higher-end markets. Where are you seeing the most of the activity taking place and what you see out there? Do you see the first-time starter homes at $250,000 or below and $300,000 below? Do you still see a lot of movement in those markets?

That’s our biggest growth and those are our median sales. We have two different sections. We’ve got the $200,000 to $300,000 range and those are considered more of the starter homes. Not that you can’t get something for less expensive than that. If those go on the market, they don’t last long. If it’s priced right, it’s gone in a week. We’re still seeing that. I listed something and it was sold. Multiple offers are still out there. We got multiple offers on that one. It’s still a hot market. I’m not getting 15 and 20 offers like I was but that’s a headache. That’s its problem. We have the $200,000 to $300,000 and then there is a $300,000 to $400,000. That’s the next step. I’m selling this one and I’m getting into that one of the new bills, that sort of thing. That’s the hardest market. The ones that sit on the market longer are either the ones that are not priced right, weren’t done right or it’s over that $400,000 and $430,000 mark. Those tend to sit a little bit longer. That’s a higher-end buyer for this before our Metroplex. You get a lot of bang for your buck here.

You’ve got your share of people moving in and invest in Dallas and a variety of things residential and commercial. Your dollar does go farther in Dallas than it does in the coast area. What do you see as far as to deal flow? Are you seeing a lot of people working the direct mail side of things, the bandit signs or the door knocking?

I’ve been seeing more bandit signs, definitely those. If they are there for a while, people stopped from that and we saw the mailers. It seems to go in cycles. Everybody’s like, “I don’t see as much of this, so I’m switching to this.” The text messages are crazy because that’s the cheapest way to reach the most amounts of people in the shortest amount of time. That one has blown up here. I know that they’re getting a good response and it keeps happening. I do have a lot of clients out there that’ll contact me because they’ve gotten three text messages and they’re like, “What’s going on in my neighborhood? Do they know something that I don’t know?” I was like, “It’s a solicitation. Come to me.” That’s the easiest way to reach everybody the quickest.

The text messages market is great. You use the technology to originate leads, to find leads, make it very easy. It’s a lot cheaper than other places. What do you like? You’re being an investor as well there. What’s your bread and butter that you love so much that gets you excited when it comes to the real estate investing side?

What’s strange is whereas I was doing a lot of calls, I’ve hired some VAs. We were doing some calls. I’ve done a few flips but I’m not doing those now. I’m doing more of a buy and hold, so I’ve been able to pick up the last one that I picked up. It was off the MLS. It wasn’t priced right and most investors are not looking on the MLS, they’re doing their stack list. They’ve got their VAs working with them like crazy. You’ve got a ton of people working the same deals or doing the email blast whereas you used to work with a realtor and look at days on the market and then, “I’ll throw you this low ball offer and see if you’re ready to take it yet,” which is how I picked up the last one. It’s fun to see that one come back around. It’s right there at your fingertips.

When you can manipulate the MLS to send you updates and things like that and what you’re targeted is a smart thing. Do you see an increase? It may be too soon to know but you can do Airbnbs and short-term rentals up in that neck of the woods relatively without the city jumping and saying no like they do here in Austin.

For the most part. Arlington itself was one of the first to pass the legislation to block off a certain area. That area is small and the people that were grandfathered in, they had until the end of the month to shut theirs down if you do not fit in that singular criteria. Whereas they were upset about it not too long ago, they may be a little bit grateful for it now because they’ve prepared for what’s my next. As everybody now with Corona at hand and people getting shut down or getting cancellations left and right, they’re scrambling for what can I do to save this?

We’ve talked with some different other investors and text messaged some of my friends out there across the country. They’re like, “It’s still holding steady but we’re starting to see it a little bit of an increase in cancellations as events get canceled or the stricter things.” The beautiful thing is when you have that aspect and you’ve done a good job, you’re getting overbooked and still making profits even if you lose a chunk of your rentals.

In fact, Kristin and I are going to do a show and it’s about that specifically and the arbitrage. If you own the property, it might be a little easier to manage that. With arbitrage, it’s a little stickier situation. It’s going to be interesting to watch. I know from talking to Kristin and her switching things up, she was able to extend one of her Airbnbs. It was some assistant or in-home care or something like that. It went ahead and now she’s extending her stay. In metropolitan areas, that’s a whole new avenue that some of these Airbnb or arbitrage want to target is the influx of people in the medical industry that’ll be coming to metropolitan areas.

They’re often getting paid and get an extra allowance for housing that is higher than normal rent and can be short-term. It’s one of the things that we’ve done in the past in military bases as short-term rentals. I have officers coming out and going in. That’s ab effective way of doing things to their port. Arlington has gone through some changes over the last couple of years too with the ballpark move in. You’ve got Jerry World coming in from Irvine and stuff like that. It’s unfortunate with the seasons being pushed back. What’s great is you do have that capability and this comes back up to have a lot of opportunities for people to come in on the weekends and for games.

Even in that small little area, if you manage to get a deal that you think will pay off in the Airbnb-zoned area, then it will pay for itself. With Arlington because they’ve managed to secure the Rangers and the Cowboys in the entertainment district and they’re trying to build that up substantially. They don’t want anything to be a major competition for large hotels in the hotel-motel industry. They’re trying to get more of those clients/customers into this region. There were some complaints about the Airbnbs. It was the money that was talking whenever they put that zoning in place. Everybody that’s in that zoned area, they’re going to continue to make money as soon as the seasons come back around. They’ll be able to get that money back. Anybody who’s not in that zoned area in the Arlington City limits, they’ve already prepared for having to discontinue their Airbnb.

Speaking of months, before this whole thing, where did you see days on the market and the amount of inventory that Dallas was having?

We are still a seller’s market. We’re still short as far as the number of houses. That’s why we still see multiple offers and short days on the market. If your priced right and if you’re in that sweet spot of the $200,000 to $300,000, then you’re not going to be on the market for more than a week. The average days on the market are somewhere around 13 to 15 days. Anything higher than that, 375 or something up there, then you’re going to see longer days on the market.

Have you seen your rent rates increase in the Dallas-Fort Worth market?

They’ve increased substantially. In fact, over the last few years, they’ve almost increased by 60%. It’s been substantial. I feel like that’s where we’ve done the majority of that rental increase. I know that my rental units, for the longest time, were stagnant. They set at the same price. I’m like, “This is never going to go up,” but now it’s almost doubled.

Is there a price point rent-wise that you have to be careful of in the Dallas area? Like in some of the major markets, anything below $500 is a two-gun alley that you can make money. They go in with two rifles. Guns aren’t always the contributing factor for a bad area.

If you’re going to do something average, the average is somewhere around $1,350, $1,375. We’re not talking about a larger apartment or home. If you’re going to end up in a sketchy neighborhood, sketchy is going to be somewhere around $1,000. Getting anything in that range, you might need to watch your back, carry that mace. It’s going to be in a sketchy neighborhood. $1,200 is still a little iffy. In East Arlington and over near the ballpark, you can still get a three-bedroom, one house for $1,400. It’s going to be an older neighborhood. It’s going to a 1950s, 1960s home. It may not look the best driving down the streets. Somebody fixes cars next door, but it won’t be a horrible neighborhood. It’s going to be older.

It may take a little bit of work there for it but that’s where you find the biggest bang for your buck and be able to come to add some TLC to it.

That East Arlington area, there’s a little pocket there. It’s in between the Arlington High and they’re doing all this revitalization in downtown Arlington where they’re making it walkable down there. In between that, you’ve got Arlington High, you’ve got the walkable downtown area and then you’ve got the entertainment district. All of that, which was considered in places a little sketchy now, is becoming prime property. We see that gentrification all the time. I’ve seen it all over Dallas like the Oak Cliff, East Dallas now going into Fair Park, you see that. In West Fort Worth, you see it.

It’s a lot of good growth there for you. Let’s talk a little bit about multifamily. Do you ever dive into that a few clients that are working on the apartment side of things?

As far as diving into that, it’s been so long that I’d hate to talk on that.

It’s not a problem at all. You know your expertise. Apartments are the most overpriced asset class, although we will see some stuff.

We’ll start to see some things fall through.

Let’s go back into that. With technology being different now than it was a decade ago, we’ve already started to see with some of our mutual friends an increase of some subject to deals where people can’t afford to pay. They’ve been laid off. We’re going to see some issues with employment in the DFW area because of a couple of reasons.

One of the largest headquarters here is American Airlines. As we know, the travel industry is getting hit hard with this. American Airlines hasn’t started laying anybody off. I know corporate travel agencies that are laying off people left and right. They’re doing that. Proactive is the wrong word because it’s not a pro but there were people getting laid off left and right.

NCS 579 | Dallas Real Estate Market

Dallas Real Estate Market: The travel industry is getting hit hard with this Coronavirus crisis.

 

Southwest Airlines has big offices there. You’ve got big oil response there in Dallas with the oils being down across the board. I saw $1.74 per gallon of gas.

It’s crazy. With the gas prices plummeting, that’s going to hit Texas hard across the board. Dallas-Fort Worth, that’s one of our big industries. Our last crash was oil, layoffs and here come the foreclosures. One of the things that I was talking about with an associate was about how our government managed it last time with us trying to do the buyouts with the big companies. Doing the buyouts and hoping for the trickle-down and we all see how that worked out. This is an opportunity for them to take a different tactic. We were trying to spitball what some of those options might look like. I feel like there’s a real opportunity here for some changes. It’s going to hurt everybody across the board but maybe not having the same crisis that we did years ago.

The banks were not ready at all for what happened in 2008, 2009 and 2010, which starting to see in different parts of the country. I got an email from my attorneys that track the multiple states talking about how some states are already canceling evictions for the next 45 days. We’ve seen in the past where attorney generals have come in and canceled foreclosure proceedings in his track for six months to top things off. The banks will come in. The Dow is up again, which is nice versus it being down 30% for the most part. It’s hard to see what the stimulus package is going to be about. Texas is love because of the fast foreclosure ratios. We’ve got fast foreclosures, fast highways, and fast executions. That’s the same thing. We’re going to see a delay on things and this is by no means, “You run out and start buying all you can.”

It’s going to take a little bit of a hit. We’re going to have layoffs. People are going to be looking to move or as they get repositioned in new careers or other things. The best way to look at it, we’re almost like a hurricane hitting the Gulf Coast. The banks weren’t in a rush to foreclose because they knew insurances come in. They’re hoping the payoff is going to come through and stuff like that. The biggest opportunity for those that are marketing is looking at tracking down those people that are working for companies that have been the hardest hit and starting to reach out to those people to say, “I’m here to help in any way we can do to help you out.” There are a lot of things that we can do to make it a win-win across the board when somebody is facing financial difficulties as we did years ago.

Whenever we spoke before when Kristin and I were talking to you and you’re explaining all about the notes and the note business and made it sound sexy, that alone is restructuring those loans so that people can still afford their homes. They’re going to find another job, they’re going to find something else to pay those bills and they still need a roof over their head. How do we restructure things? There’s still a way to make money in that industry.

That’s a big thing. We’ve seen an increase and you’ve seen that too with people already looking to have somebody take over their mortgage, their subject to deals or coming in and adjusting your rents if you’d need to forgive rent for a month or two. We’ve seen that in different apartments. The City of Austin came in. I’d be surprised if we see more of this where the utilities in the apartment were like, “If you can’t pay your power bill this month, we’re not turning you off.” There’s a way to alleviate things. The best thing most people would do is empathize. Realize we’re going to be back to normal in a week and we’re stuck for 30, 60, 90 days but that’s still three months behind. That puts people in a default status and see what’s going on. The opportunity there is knowing where to look and how to approach it timing-wise.

If everybody can get on board with this prolonging whether the mortgage companies have to prolong that mortgage to tack it on end or somehow spread it out over a period of time, you still get your money. Everything’s on hold now. Some tactics like that will give some people some room to breathe. If everybody can get on board with something like that, the hardest thing to get over will be the ones that got laid off that can’t get the job right when things start to get back to normal. Because companies aren’t automatically going to be like, “We’re hiring everybody back now.” It takes some time. What does that time look like once we’re not all on quarantine for a month to three months?

One of the big things that are great about the Dallas market is the availability of many different investors, investment clubs, Meetup groups and this great networking in the Dallas market, unlike a lot of other places out there. Everybody works together for the most part. Would you agree to that?

I would agree with that. It’s strange. After diving in, however many years ago going into the Roddy Meetups and all these other little meetups trying to meet people, get information, and spend a little money here and there. There wasn’t the camaraderie that I see and that has developed. It’s been incredible to watch this whole community of investors that most people around the country consider, “You’re my competition. I’m not going to reach out to you. I’m not going to tell you my secrets.” It’s been interesting to watch everybody here come together, “You’ve got an idea? Let’s bounce that off of each other.” There’s enough for everybody and more of the idea of we’re better together type of mentality then you’re my competition and I’m going to keep all my secrets over here. It’s been neat to watch and be a part of.

Are you seeing a lot of outside investors from California and other places coming into Dallas in the last few years? I imagine you have. If you have, what do you see that they’re looking for?

We have and as far as what I’ve seen personally, is buy and hold. They know how much our properties have appreciated. Granted it’s not the skyrocketing that you’re going to see on either one of the coasts or down in Florida or anything like that but it’s substantial and it’s steady. Ours is consistent, deep dips and that’s attractive.

Cashing out the California condo and buy three of them here in Dallas and Texas.

It’s a no-brainer. It’s like, “We’re cheap compared to them.”

You’ve also had a lot of people that have money they’re looking to invest and looking to lend as well too to other investors on either mezzanine or fix and flips in the DFW market because of different IRA investors at Quest and that neck of woods as well too.

Quest has its own educational. I didn’t know anything about that. Now I’m like, “I’m telling other people about have you thought about your IRAs? Let’s look into that. You’ve got money. We can invest that.” That goes to show you what social media, all of these meetup groups, everybody, the camaraderie and the pulling together of resources that have happened here.

Do you like to go out and show homes to your traditional first-time buyers or you prefer working with investors? It’s a loaded question but we get a lot of our readers out there.

I like the first-time homebuyers in the sense that I like to be able to get them a deal. I like the programs that are out there, excess offers, some great first-time homebuyer programs. I’ve helped a lot of my friends and my friends’ kids get into homes on those first-time homebuyer programs and there’s nothing more exciting than somebody would be like, “They’re going to lend me that money and I get this house.” I know the first time I bought a home, I couldn’t believe somebody was going to lend me that money. You don’t think of it that way. It can be a little bit more tiring whenever you’re working with first-time homebuyers or buyers in general. I like dealing with investors because they know what they want. It’s a more interesting transaction and I do it myself. If I’m not teaching somebody how to do something, maybe they’re teaching me something I didn’t know already know.

Everybody’s different as a borrower but any interesting lending programs that stuck out to you from some of your buyers to your surprise a little bit?

I did a segment on the Real Estate Divas about the ITIN buyers. I was able to put together a pamphlet since the industry prior to real estate was being in the entertainment, restaurant, bar business. I still know a lot of people have a lot of connections in that industry. A lot of their employees are ITIN buyers. To be able to pass on this kind of information and get them into houses, that’s not something that I had ever even dove into before.

NCS 579 | Dallas Real Estate Market

Dallas Real Estate Market: ITIN buyers are those in the US who are working legally and paying their taxes, but do not have a Social Security Card.

 

For those that don’t know, what’s an ITIN buyer?

An ITIN buyer is they are here, they’re working legally. They pay their taxes, but they do not have a Social Security card. It’s a foreign national that’s here legally but they’re allowed to purchase property with an ITIN lender. Those lenders will require a more down payment and higher interest rates because you don’t have the Social and you’re not a citizen but you can purchase property in America.

One of the great things about a lot of those ITIN buyers is it’s a little bit different mentality. They’re very good about saving. They have a family. Family comes together. It’s important. A lot of people put money together to buy a house. They’ll have the whole family live in there as a way to get in. They’re paying that mortgage first and foremost because you had some of those. We’ve originally met them in my previous life, but it becomes a good solid borrower. A lot of times, you’ve seen that too with owner financing taking place. People on the ITIN side that can get qualified, but they’ve got a down payment to make things happen.

Even with the owner financing, one of the flips that I did, I didn’t personally owner finance it, but I did place him with an owner financing provider. He’s a citizen. He’s a doctor, the debt-to-income with all of the student and college debt made it terrible on paper. He’ll do that for a year and then be able to refi and get in a regular loan.

There are opportunities everywhere if we know where to look.

You just got to be able to juggle those balls and know who to talk to.

That’s big, “Know who to talk to.” That comes from networking and from being out there, seeing what’s going on, learning, taking the opportunities that come across you and realizing no maybe means not now, but there’s often multiple ways to skin the cat, for the most part.

There are 100 ways to skin a cat. Networking is super key in doing that. Knowing who to call even with that deal that I told you. The flip that’s now owner financed, we called three different owner financers in order to get him with the right one because they have their different rates and what they require in that business. We put them with the best fit for him and it’ll work for the time period that he needs it to before he can refinance and get a better rate.

What’s the best way for our readers to connect with you, to reach out to you if they need some help there in the Dallas market to work with you?

They can reach out on Facebook. I have Texcel Real Estate, Real Estate Divas or Jer’Leigh Thompson Real Estate Broker. TexcelRealEstate.com is my website. Any of those, message me, any questions that you might have. The Real Estate Divas, even though we haven’t been near as consistent as you. We got to get back on a recording on a regular basis.

You’ve done some good things. The walkthroughs with you, Kristin, and Brittany Washington as well. Those who break the coast. 

The Port Aransas going down.

I grew up down the neck of the woods. That was great. I grew up in Corpus Christi for the most part in Ingleside.

I didn’t realize that. I have family down in San Antonio. Whenever I went and lived with my dad for a while, we were always down in Port A. That was where we went to sneak away and things he wants us to do.

Julie, thank you for coming on the show. We appreciate it out there and keep doing it. I’m sure we’ll have to bring you back on as we get through things as Dallas figures out what’s going on there and everything like that. The best way to reach out is by Texcel. We appreciate all you do. Keep up the great work. Good catching up with you and hopefully, we’ll see you sometime soon here.

See you soon, Scott.

That’s going to wrap it up for this episode of The Note Closers Show. If you like Dallas in the neck of the woods, you’ve got a great professional here who knows the market. She does an amazing job, she’s got a proven track record and a history. She’s been through ups and downs of the market not like many people. As we all know, there’s been a lot of people, “I’m a realtor,” in the good times and we don’t expect that to last while everybody sticks around. Stick with somebody that knows the market, has been through ups and downs and is also an investor as well. That’s a huge thing to add as a trusted asset to your team of professionals. If Dallas is the market for you, talk with Jer’Leigh. Go out, take some action. Be safe out there and we’ll see you at the top.

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About Jer’Leigh Thompson

NCS 579 | Dallas Real Estate MarketJ.Leigh Thompson is the broker and owner of Texcel Real Estate. She moved into real estate 16 yrs ago after a lifetime in the hospitality industry. Having ‘made it’ through the last housing bubble she knows first hand how to pivot to survive. It was that housing bubble that made her align herself with residential investors and learn to invest in her own ventures. This ultimately led to becoming the originating broker for Propelio.com, the investor online deal management platform and education tool.


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