Frisco, TX, is one of the fastest growing cities. Learn about Frisco real estate opportunities in this market overview.

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Frisco, TX - Real Estate Market Overview - OfferMarket

Frisco, TX

## Does It Make Sense To Sell Your Rental Property?

 

Being a landlord does not always make sense from a financial and quality of life perspective. Whether you stumbled into rental property ownership accidentally, or you have collected a portfolio of rental properties intentionally, there comes a time when every rental property owner asks themselves if the headaches and financial returns are worth it. 

 

If you are having second thoughts about owning your rental property, we want to make sure you know about OfferMarket. 

 

OfferMarket is a rental property investment platform. We and our network of qualified investors would love to provide you with [competitive offers](https://www.offermarket.us/sell) for your unwanted property. Requesting an offer for your rental property is free and comes with no risk and no obligation.

 

## Financial Perspective

 

At the end of the day, owning one or more rental properties is a business. Your rental income is revenue. Your tenants are your customers. Your real property is an asset. Your mortgage and deferred maintenance are liabilities. The best way to judge the performance of your rental property business is to look at two things: 

 

1. the free cash flow that it generates
2. the equity you have in your property

 

## Free Cash Flow

 

Free cash flow is the cash your rental property generates after subtracting your mortgage principal, interest, taxes, insurance ([PITI](https://offermarket.us/real-estate-glossary/piti)), property management, and your reserve for maintenance. If you self-manage the property, we recommend factoring in your time at the same rate that you would otherwise pay to a property management company. This is typically 5% to 10% of monthly rent and 25% to 50% of first month's rent for new tenant leasing.

 

If your rental property is generating negative free cash flow (i.e. you are losing money on a monthly or annual basis), then the property is likely not worth owning or one or more actions need to be taken to correct the situation. 

 

- Raise rent
- Fill vacancies
- Refinance into a lower rate to reduce your interest payments

 

It is possible neither of the above is feasible. Perhaps the property has major [deferred maintenance](https://offermarket.us/real-estate-glossary/deferred-maintenance) that needs to be addressed in order to fill vacancies or raise rent.

 

When you look at your annual free cash flow plus your equity appreciation divided by your equity in the property, you will get a clear sense of how your investment is performing relative to other investments. Most notably, relative to passive investments that do not take up your time.

 

**For example:** if your property is generating $5,000 per year in free cash flow and your property is worth $5,000 more compared to last year, and you have $100,000 of equity in your property, then your return is 10%. Compare that to the S&P 500's 10 year annualized return of 13.4%. Looking at it this way makes it difficult to justify owning and managing a rental property from a financial perspective.

 

## Quality Of Life Perspective

 

Rental properties are not just financial investments, they are time investments. As we covered above, they are a business and they do not perform well with absentee owners. That's why we recommend factoring in the cost of your time if you self-manage your property. Even if you use a property management company, you're still ultimately responsible for managing your rental property. Finding a great property management company can be easier said than done, and a low percentage of property management companies perform to a satisfactory level.

 

If you're retired and you want something to keep you busy, owning and managing rental properties might fit in great with your lifestyle. If you're retired and you want to travel or reduce stress, owning rental properties might not be an ideal situation.

 

If you own one or more rental properties and you are worried about leaving your loved ones with an unwanted responsibility when you pass on, it might make sense to cash in on your rental investment.

 

## Most common reasons to sell your rental property

 

Drawing on the above concepts and adding one final point to the list, here are the reasons why landlords get tired of owning a rental property:

 

1. Financial returns are inadequate
2. Quality of life is negatively affected
3. Political and economic factors

 

To this final point, we can look to the #rentstrike movement brought on by the major economic shock caused by the COVID-19 pandemic. Landlords, especially "mom and pop landlords" are getting squeezed by a moratorium on evictions, and a growing resentment towards landlords.

 

## Next Step: Get Competitive Offers

 

If you are tired of being a landlord, you are not alone. Either you know for sure you want to sell your rental property or you are still trying to figure it out.

 

Regardless of which camp you are in, you can [request offers](https://offermarket.us/sell) with no obligation. We would love to buy your rental property.

Tired of being a landlord? It has never been easier to sell your rental property for a competitive price. Get risk free offers from OfferMarket.

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Tired of Being a Landlord? Sell Your Rental Property

**Last updated:** May 4, 2022

 

A fascinating 13 year bull market has finally given way to deteriorating market conditions both in the real estate sector and the broader economy. In this report, we'll look at market data to understand how various real estate investing strategies have fared since the COVID-19 pandemic began. Our focus, in line with our [real estate investing platform](https://www.offermarket.us/), will be on single family residential real estate.

 

The COVID-19 pandemic-fueled housing bubble has shown signs of mania, with retail buyers (people buying personal residences), [iBuyers](https://www.offermarket.us/real-estate-glossary/ibuying), [REITs](https://www.offermarket.us/real-estate-glossary/reit) and and Wall Street investment firms collectively bidding up the value of homes to levels that are -- in many geographic markets -- rather concerning.

 

For more insights into the health of the US housing market, US consumer and broader US economy, review our [Federal Reserve Economic Data Dashboard](https://www.offermarket.us/blog/federal-reserve-housing-market-economic-data).

 

## Investment Comparison: Real Estate vs PropTech vs Stock Market

 

There are many different ways to invest in real estate and performance certainly varies.

 

## PropTech Stocks

 

[PropTech](https://www.offermarket.us/real-estate-glossary/proptech), short for property technology, has received record amount of private investment from venture capital firms and the asset class was front and center among the 2020-21 SPAC merger boom.

 

## PropTech Stocks 1-Year Returns

 

Compass, the technology-enabled real estate brokerage IPO'd with a market cap of --, that market cap has shrunk by 71% in the past year.

 

**Opendoor**, the leading iBuyer, has seen its market capitalization decline by 65% over the same timeline.

 

**OfferPad**, the second largest pure-play iBuyer has halved in value over the past year.

 

**Zillow** stumbled 69% over the trailing 12 months and shut down its Zillow Offers iBuying business. Related content: [Reading Between The Lines: What Zillow's iBuying Pause Really Means](https://www.offermarket.us/blog/reading-between-the-lines-what-zillow-ibuying-pause-really-means)

 

**Redfin** is down a remarkable 84% over the past year, also running into difficulties with its RedfinNow iBuying program.

 

Looking at these specific examples, we see three core items that have destroyed shareholder value:

 

### Record Low US Housing Inventory

 

The number of active listings in the United States is down from 1 million units in January 2020 to under 400,000 units in March 2022.

 

<iframe src="https://fred.stlouisfed.org/graph/graph-landing.php?g=NVDj&width=670&height=475" scrolling="no" frameborder="0" style="overflow:hidden; width:670px; height:525px;" allowTransparency="true" loading="lazy"></iframe>

 
 

### Doubling of Mortgage Interest Rates

 

<iframe src="https://fred.stlouisfed.org/graph/graph-landing.php?g=OMYo&width=670&height=475" scrolling="no" frameborder="0" style="overflow:hidden; width:670px; height:525px;" allowTransparency="true" loading="lazy"></iframe>

 
 

### iBuying Has Been Exposed As A Deeply Flawed Business Model

 

The unit economics of iBuying are alarming. Most of these companies lose money on a per unit basis. iBuying is effectively unprofitable (to marginally profitable at best) home flipping at scale. For more on this, we recommend reviewing [Mike Del Prete's Research](https://www.offermarket.us/blog/mike-delprete-research-ibuyer-power-buyer).

 

## Mortgage Stocks 1-Yr Returns

 

**LoanDepot** is down -85% on concerns about the impact that rising interest rates are having on refinancing demand, and low purchase transaction volume due to record low housing inventory.

 

**Rocket Companies**, parent of Rocket Mortgage and Quicken Loans, is down -61% for the same reasons. 

 

**United Wholesale Mortgage** is down -55% for the same reasons.

 

This is what happens when housing inventory reaches record lows and a major interest rate spike eliminates refinance demand.

 

## Owning Actual Real Estate 1-Year Returns

 

Meanwhile, owners of real estate have performed convincingly well over the past year. The Case-Shiller Home Price Index is up over 19% over the past year -- an unprecedented appreciation driven by low inventory and increased demand.

 

Landlords have seen median rental income increase more than 5% over this time period.

 

Passive real estate investors have seen REITs outperform the market:

 

- Vanguard Real Estate ETF (ticker: VNQ): +5%
- Invitation Homes (ticker: INVH): +14%

 

## Stock Market Performance 1-Year Returns

 

- S&P 500: -1%
- Dow Jones Industrial Average: -3%
- Nasdaq Composite: -12%

 

## Real Estate vs Real Estate Services vs Stock Market

 

Owning real estate may be a better business model than facilitating real estate transactions, and in the past year has proven to be a better asset class than the broader stock market.

 

We believe everyone should have real estate in their portfolio.

 

## Follow On Twitter For Real Estate Insights

 

<blockquote class="twitter-tweet"><a href="https://twitter.com/hashtag/proptech?src=hash&amp;ref_src=twsrc%5Etfw">#proptech</a> stocks 1-yr returns: <a href="https://twitter.com/search?q=%24COMP&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$COMP</a> -71%, <a href="https://twitter.com/search?q=%24OPEN&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$OPEN</a> -65%, <a href="https://twitter.com/search?q=%24OPAD&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$OPAD</a> -50%, <a href="https://twitter.com/search?q=%24Z&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$Z</a> -69%, <a href="https://twitter.com/search?q=%24RDFN&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$RDFN</a> -84%&mdash; Daniel Sperling-Horowitz (@dwshorowitz) <a href="https://twitter.com/dwshorowitz/status/1520970716547805184?ref_src=twsrc%5Etfw">May 2, 2022</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

 

<a href="https://twitter.com/OfferMarketUS?ref_src=twsrc%5Etfw" class="twitter-follow-button" data-show-count="false">Follow @OfferMarketUS</a><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

 

<a href="https://twitter.com/dwshorowitz?ref_src=twsrc%5Etfw" class="twitter-follow-button" data-show-count="false">Follow @dwshorowitz</a><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

In this report, we'll look at market data to understand how various real estate investing strategies have fared over the past year.

PropTech vs Rental Property Investing | OfferMarket Blog

Real Estate vs PropTech vs Stock Market

Grow your real estate investing business with the most competitive DSCR loan product. OfferMarket also provides DSCR rental loans, bridge loans, hard money, fix & flip, rehab, ground up construction loans.

Rental Loans

#### What is real estate equity?

 

Real estate equity is the ownership interest in a property. Typically, a property is purchased with a mortgage loan at a specified loan-to-value ratio ([LTV](https://www.offermarket.us/real-estate-glossary/ltv)). 

 

#### How to calculate real estate equity?

 

Equity = Market Value - Loan Value

 

For example, if you own a property that, based on [comps](https://www.offermarket.us/real-estate-glossary/comps) or an [appraisal](https://www.offermarket.us/real-estate-glossary/appraisal) is worth $100,000, but you have a $75,000 mortgage loan, then your equity is $25,000.

 

$25,000 = $100,000 - $75,000

Equity in real estate refers to ownership value after liabilities are subtracted. Learn more about real estate equity at OfferMarket.

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