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McKinney Real Estate Investment

The first thing you must note is that the Old McKinney area is very different from the New McKinney. While it’s normal to hear people, and more so the locals lumping McKinney, Frisco, and Plano together, these regions are distinct from one another, with each having a diverse and unique economy of its own.

Yes, these places do influence each other, with the residents of each city getting a chance to enjoy what the others have to offer, but there’s more to consider when investing.

 

Bird-eye view of a neighborhood with single family homes in McKinney Texas

Real Estate Investing Performance In McKinney

Image showing brown and white house near grass field under blue sky in McKinney

As with every other investment, you’ll want to know what to expect from the money you have spent on your McKinney rental property. You can use the table we have provided below to get a glimpse of how much you need to raise to buy a rental unit within this area.



Avg Purchase Price Avg Cap Rate Avg Cash on Cash Return Avg Cash Needed to close
Commercial 5+ units LTR na na na na
Short Term Rental (SFH) 275k - 350k 6% - 8% 8% - 11% $75,950 (furnished)
STR (2-4 Units) na na na na
Long Term Rental (2-4 Units) 200k - 250k per door 4%-5% 2% - 3% $80,250 per door
Long Term Rental (SFH) 250k - 325k 2% - 4% 2% - 4% $62,500
Househack (2-4 Units) 200k - 250k per door n/a n/a $20,050 per door
Househack (SFH) 275k - 350k n/a n/a $16,325
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Tips On Where to Invest in McKinney

At the time of writing this guide (January 2023), the market has softened considerably. What this means is that there’s a need to focus on the higher demand sections of McKinney city. To start with, you should note that Downtown McKinney is among the oldest historic districts of the Lone Star State.

It has 100+ shops and boutiques, crowds of locals and tourists on its streets year-round, and a gorgeous and eye-catching historic town square. McKinney is rated as among the few cities in North Texas where you can easily draw a radius around downtown and use it to try to get as close as you can to its epicenter in a bid to maximize the returns on your investment.

The city further expands its footprint to the north and east, where you’ll find acres upon acres of upcoming real estate development, including new construction of single-family homes. I believe this is the best time to buy, as it appears as though there is an inventory glut, especially when it comes to the new construction space.

As an investor, you should prepare yourself to deal with a higher vacancy rate than usual in what appears to be the New McKinney subdivision culture. How long this will last, no one can really tell!

 

Main Activities/Attractions in McKinney

McKinney has proven to be a thriving hub for leading tech and manufacturing companies in North Texas. The fact that it’s close to Dallas and that it forms part of the DFW metroplex makes it even more appealing. 

Statistics from the last census show that its population has grown by around 70% in the last few years and doesn’t seem to be slowing down anytime soon. Top employers include Raytheon, Encore, Manner Plastics, Zynga, and Emerson. 

Couple this up with its highly-rated school athletics and academics, and you now see why McKinney is such a highly desirable market, especially for young families. The city has a strong historical component and has served as an industrial hub since the 1840s when it started.

In the early 1990s, McKinney only had a population of around 20,000 residents. In 2020, its population ballooned to well over 200,000 residents, which goes to show just how fast it has grown in those few years.

Top Things to Do in McKinney

  • Visit Historic Downtown McKinney: This is the place to visit for those who want to experience the city’s history and cuisine. It features historic buildings, restaurants, and shopping stores. Some of its buildings are over 160 years old.
  • Colin County History Museum: The Colin County History Museum preserves the history of the city and the state of Texas. The museum was named after Colin McKinney, a local Texan revolutionary who played a role in instigating the revolution of 1835.
  • Towne Lake Recreation Area: The Towne Lake Recreation Area sits on 108 acres and features everything from a playground to a lake, picnic shelters to trails, and more. The family-friendly park is worth a visit with your family on those days when you don’t feel like doing much.

Success stories investing in this area

“Used Victor in finding and purchasing my first investment property. Victor and his team were knowledgeable in providing help along the way especially toward the end while getting everything squared away.”

Investor

Logan Hicks

Strategy

Long Term Rental

Victor was an awesome realtor! We were first time investors in Texas and he was very responsive, experienced, and pleasant. Every question we had he answered promptly and from start to finish Victor guided us thorough the whole process and made the buying transaction as smooth as possible for us! You will not be disappointed by working with Victor Steffen, thank you Victor!

Investor

Janeth Quintero

Strategy

Long Term Rental

Investment Strategies for McKinney

Short-term rentals do best, especially when you consider the areas near the thriving downtown historical scene, nightlife, festivals, galleries, restaurants, and proximity to Plano and Dallas. The STR strategy is one I recommend you consider for this market.

We also really like the BEAF (break-even appreciation-focused) play in McKinney. Another winning combo includes the single story, single family, four bedrooms, 1800+ sqft, recently built in a clean subdivision.

There are few multifamily units in McKinney, Texas, and we typically don’t see them on the market. Still, we DO see single-family homes + ADU or detached guest units. And while these multifamily units can be tough to search for, if a client wants to focus on a multifamily play in McKinney, the SFR + ADU deal is a great compromise and a good way to open up some additional inventory for consideration.

Is McKinney a Good Real Estate Investment?

McKinney, Texas is considered a good community to invest in for several reasons:

Strong economy: McKinney has a strong and diversified economy that has been growing steadily, attracting new businesses and creating job opportunities.

Demographic growth: McKinney is one of the fastest-growing cities in the Dallas-Fort Worth metropolitan area, with a growing population that is expected to continue to increase in the coming years.

High quality of life: McKinney is known for its high quality of life, with a variety of recreational and cultural attractions, excellent schools, and a low crime rate.

Affordable housing: McKinney offers a wide range of housing options, including affordable single-family homes and apartments, making it an attractive option for people of all income levels.

Proximity to major cities: McKinney is located in the heart of the Dallas-Fort Worth metropolitan area, providing easy access to a variety of job opportunities, cultural attractions, and amenities in the surrounding cities.

Overall, McKinney’s combination of a strong economy, growing population, high quality of life, affordable housing, and proximity to major cities make it an attractive option for investment.

Is it a Good Time to Invest in McKinney?

There are several reasons why now is a good time to invest in McKinney, Texas:

Low interest rates (relative to historic norms): Currently, interest rates are at historic lows, making it an attractive time to finance a real estate purchase. This can increase affordability and make it easier for people to invest in property.

Strong housing market: The housing market in McKinney, as well as in the Dallas-Fort Worth metropolitan area as a whole, has been strong and is expected to continue to grow in the coming years. This can lead to increased demand for rental properties, which can in turn increase rental income for investors.

Demographic growth: McKinney is experiencing population growth, which can drive demand for housing and increase property values.

Strong economy: McKinney has a strong and diversified economy that has been growing steadily, attracting new businesses and creating job opportunities. This can lead to increased demand for housing from people relocating to the area for work.

Overall, the combination of low interest rates, a strong housing market, demographic growth, and a strong economy make now a good time to consider investing in real estate in McKinney. It’s important to keep in mind, however, that real estate investment is a long-term strategy and that past performance is not a guarantee of future results. As with any investment, it’s important to thoroughly research the market and carefully consider your own financial goals and risk tolerance before making a decision.

Best Neighbourhoods to Invest in McKinney

Here are three communities in McKinney with strong economic outlook:

Craig Ranch

Craig Ranch is a master-planned community located in the northern part of McKinney. It offers a variety of amenities, including a golf course, fitness center, and parks, and is known for its high-end homes and well-manicured streetscapes.

Stonebridge Ranch

Stonebridge Ranch is another master-planned community in McKinney that is known for its large homes, amenities, and quality of life. It features multiple parks, golf courses, and community pools, as well as a strong sense of community and a commitment to preserving natural areas.

Adriatica Village

Adriatica Village is a mixed-use development in the heart of McKinney that offers a variety of residential, retail, and dining options. It’s known for its Mediterranean-inspired architecture and its lively, walkable streets, and is popular with families, young professionals, and retirees.

These communities are just a few examples of the many options available in McKinney. When choosing a community, it’s important to consider factors such as proximity to work, access to amenities, quality of schools, and the overall lifestyle and community culture.

 

Financing Information for McKinney Real Estate Investors

If you’re looking for financing, you’ll be glad to learn that JJVM can finance owner-occupied loans for single-family or house hackers’ investments. Such a loan will attract a 20% down payment.

Positive Cashflow in Appreciating Markets

Ready to invest in central Texas real estate?

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Frequently asked questions

Is McKinney a Good Real Estate Investment?
McKinney, Texas is considered a good community to invest in for several reasons: Strong economy: McKinney has a strong and diversified economy that has been growing steadily, attracting new businesses and creating job opportunities. Demographic growth: McKinney is one of the fastest-growing cities in the Dallas-Fort Worth metropolitan area, with a growing population that is expected to continue to increase in the coming years. High quality of life: McKinney is known for its high quality of life, with a variety of recreational and cultural attractions, excellent schools, and a low crime rate. Affordable housing: McKinney offers a wide range of housing options, including affordable single-family homes and apartments, making it an attractive option for people of all income levels. Proximity to major cities: McKinney is located in the heart of the Dallas-Fort Worth metropolitan area, providing easy access to a variety of job opportunities, cultural attractions, and amenities in the surrounding cities. Overall, McKinney's combination of a strong economy, growing population, high quality of life, affordable housing, and proximity to major cities make it an attractive option for investment.
Is it a Good Time to Invest in McKinney?
There are several reasons why now is a good time to invest in McKinney, Texas: Low interest rates (relative to historic norms): Currently, interest rates are at historic lows, making it an attractive time to finance a real estate purchase. This can increase affordability and make it easier for people to invest in property. Strong housing market: The housing market in McKinney, as well as in the Dallas-Fort Worth metropolitan area as a whole, has been strong and is expected to continue to grow in the coming years. This can lead to increased demand for rental properties, which can in turn increase rental income for investors. Demographic growth: McKinney is experiencing population growth, which can drive demand for housing and increase property values. Strong economy: McKinney has a strong and diversified economy that has been growing steadily, attracting new businesses and creating job opportunities. This can lead to increased demand for housing from people relocating to the area for work. Overall, the combination of low interest rates, a strong housing market, demographic growth, and a strong economy make now a good time to consider investing in real estate in McKinney. It's important to keep in mind, however, that real estate investment is a long-term strategy and that past performance is not a guarantee of future results. As with any investment, it's important to thoroughly research the market and carefully consider your own financial goals and risk tolerance before making a decision.
Positive Cashflow in Appreciating Markets

Ready to invest in central McKinney real estate?

Schedule a call