The Real Risks of Dallas Real Estate (and How to Navigate Them)
It’s a strange thing to sit in Tel Aviv, one of the world’s most expensive cities, and think about Dallas real estate. But that’s exactly what I’ve been doing this week. As I sip coffee overlooking the Mediterranean, I’m reminded of something one of my Georgetown MBA professors used to say: “The greater the return, the greater the risk.”
I’ve been mostly fortunate in my investing journey—and so have many of my clients—but no investment is without its risks. In fact, being upfront about them is critically important for me to align with SolMidas’ values. So today, I want to walk you through some of the real risks that come with investing in Dallas real estate, especially when working with the Dallas Housing Authority (DHA), and what you can do to navigate them.
1. The Vacancy Trap
Vacancy is one of the biggest threats to your bottom line. The Dallas suburbs rental market is seasonal, with peak demand from late April to mid-June—families want to settle in before the school year. Buy in the off-season, and you may face longer vacancies, sometimes several months long. But here’s the upside: you often get a better purchase price in fall or winter that can offset months of empty rent rolls. I wrote a full blog post on vacancy if you want to dig deeper.
2. Housing Payment Pressure
Section 8 vouchers offer stability, but they aren’t bulletproof. The current administration has been pushing on HUD budget thereby getting housing authorities to align voucher rates more closely with fair market rents. We’ve seen some downward pressure on payments, slower processing times, and general belt-tightening at DHA. While the DHA has historically been a well-run program, investors need to remember: this is a government program, subject to shifting political winds.
3. Tenant Challenges
Most Section 8 tenants are no more or less risky than market tenants based on my experience. But outliers exist. I’ve personally had a tenant whose hoarding triggered a pest infestation that took the home offline for three months (!). Here’s the good news: landlords have tools with Section 8 tenants. Regular inspections, background checks, and the potential loss of a tenant’s voucher for noncompliance give us more leverage than in the open market.
4. The Maintenance Wildcard
Even a shiny new house can surprise you with a broken water heater or roof leak. And while big repairs can swallow a year’s cash flow, most issues can be prevented with careful upfront inspections and proactive upkeep. In every deal, we prioritize HVAC systems, roofs, water heaters, and fencing in our inspection process but costs can always creep up and are unpredictable. It’s a simple but effective risk filter.
5. HOA and Subdivision Roadblocks
Dallas has its fair share of HOA-controlled neighborhoods. While we always check rental restrictions before buying, HOAs can change bylaws—and votes can introduce new caps or fees. The Texas Supreme Court has weighed in to limit some of these changes, but it’s still something to watch.
6. Neighborhood Shifts
Neighborhoods are living organisms. What’s stable today can change tomorrow. Economic shifts, new developments, or rising crime can affect both rentability and resale value. That’s why we always look beyond the property and pay close attention to local trends.
What the Data Says
According to recent reports, Dallas’s overall rental vacancy rate hovers around 7%—higher than the national average of ~6%. Section 8 properties tend to have lower eviction rates but slightly longer vacancy turnaround times due to inspections and approvals. And while Texas has no state income tax—a major advantage—investors should budget ~1-2% of property value annually for maintenance (depending on property age), on top of property taxes, which average ~1.8% in Dallas County.
My Take
Here’s the bottom line: no investment is risk-free. But understanding and managing risk is what separates successful investors from lucky ones. The Dallas market, coupled with the Section 8 program, remains one of the strongest combinations I’ve seen for long-term cash flow and appreciation. I’m personally invested here, and while I’ve had bumps along the way, the journey has been well worth it.
If you’re interested in learning more about both the upsides and the risks—or want to compare notes on the Dallas market—reach out or subscribe to our newsletter. Smart investing starts with clear eyes and a solid game plan.