Christopher, when working with an investor with an eye towards leasing a property I get a property manager involved before the sale. A good property manager can tell you what your prospects are for renting the property out and keeping it occupied.

I agree with the other agents in not necessarily giving a lot of weight to the tax roles. Typically they aren't off by that far, but it is the amount that the taxes are based on, not the worth of the property. In very few cases have the county appraisal district employees actually entered the home to take precise measurements or to figure out that the interior finish off is below average or above. You definately need to look at comparables and ensure that the quality is similar doing that as well.

Good luck with your investment!

I hear a lot of negative answers about investing in Little Elm. The last house I had for rent or lease in Little Elm sold before it leased, and I could have sold it 6 times over before I got to closing. I have a 17% market share in Little Elm. Why? Agents who stereotype this area as a bad investment and won't work there. I love Little Elm and sell and lease there all the time. Some of my fastest closings happen at the price points that are Little Elm's mainstay - $130,000-170,000. Some of the neighborhoods went through rough times because builders put people into loans that should have actually been rejected for home sales. Abuse of loan programs was a big factor in why some of the neighborhood values slipped. But, I would strongly encourage you to visit the area and make up your own mind. With the opening of Panther Creek Parkway this month to the North Dallas Tollway, a lot of the traffic issues agents had with Little Elm are now a thing of the past. I have never sold a home in Little Elm where the owner took a loss.

Bruce is right, I'd look at another area, those homes have not appreciated at all yet, they might in time. Alot of the builders had to give alot of incentives to sell. Try south, maybe by a college properties seem to rent in no time, and the values are higher.

Bruce has some good advice. I don't know your area at all. However, as an investor, what I look for (and what you should consider looking for) are:

1) What is the current fair market value of the property? You don't want to overpay, and as Bruce said the tax assessment means nothing. Ideally--and generally--you should be getting it under FMV.

2) Will it cash flow? This requires you to determine several things: First, assuming it's a fair value, what would your total monthly costs be on the property. That includes PITI (principal, interest, taxes, and insurance--and your interest rate as an investor will be higher than for a homeowner), HOA or condo fee (if applicable), maintenance (figure 1% of purchase price), vacancy (figure 16% of fair market rent--essentially 2 months vacant out of 12), and any other expenses. Management fees, too, if you're going to have it managed. Second, what would it rent for? Either, what would it rent for in its present condition, or what would it rent for fixed up? If fixed up, add those fix-up expenses to your calculations above.

3) Assuming you're buying it at a good price, and assuming it'll cash flow, what are the prospects for appreciation? Two years isn't a long time to bank on appreciation, especially in today's market. You've got a better shot at reasonable appreciation if you consider holding it for 7-9 years...and that ought to be OK if it's cash flowing. Besides, your transaction costs on a two-year hold will eat up much of your hoped-for profit. A quick scenario: Suppose you buy it at $115,000 and it's really worth, say, $130,000 (allowing for price declines since the previous assessment). Let's assume, optimistically, that the market has bottomed out. (I don't think it has, but I could be wrong.) In fact, let's say the market goes up 4% a year...not great, but pretty good from today's perspective. In two years, your property will be worth about $140,000. Your transaction costs in selling (agent's commission, taxes, etc.) probably will run close to 10%. Let's say $14,000. So you might come out of it at $126,000. Not a heck of a lot--especially when you're banking on appreciation to turn a poor deal into a marginal one.

At the very least, plan on a 7-10 year old and make sure it'll cash flow.

Hope that helps.

Don't look at the tax roll value. Often they are way off. Look at the home values in the area. What's the home really worth? What I would be worried about in Little Elm is not the toll bridge, but rather #1 Can you rent the place. #2 What kind of rent can you get for it. #3 What will resales be like in the area. One of the issues I often see in Little Elm is that many of the homes were built by discount builders and wear fast. Prices haven't gone up much in the area and in fact may have fallen some over the past year or so, so you may need to account for some rennovation costs in for the resale. I'd look at central Denton instead of Little Elm, due to better demand factors.