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Why Seller Financing Often Makes Sense in San Antonio

As successful under-market value real estate investors in San Antonio, our investors own plenty of rental properties and owner finance properties. Depending upon market conditions, we may do one investment property type more often than the other, but we always strongly believe in the San Antonio owner finance market as a way to grow your wealth.

Some real estate investors are afraid of owner financing a property. Why would you want to be the bank? Most investors want to put down 20% on a property and rent it out. Or they want to flip the house and move on to the next real estate investment deal. But there is a lot of money to be made by owning the property in cash and owner financing it. You also can have a mortgage on the home and do a wraparound mortgage as well as you like, but that is a topic for another blog post.

The major benefit of owner financing a property is that you enjoy having checks mailed to you each month for the mortgage payments, and you do not have to do anything else. Owner-financed property is a nice fit for the weary landlord, tired of the repairs and hassles of rental property. That is a major reason why owner-financed houses in San Antonio became our investors’

Offering seller financing on a fixer-upper will open up many opportunities to make a lot of money with your investments. Many potential buyers of a home do not qualify for a traditional mortgage. In San Antonio, we have millions of Hispanic renters who want to own their own home. But they have bad credit or no credit; many deal only in cash. These potential buyers need someone to give them financing if they are ever going to buy. This is a great opportunity for you to make a good ROI on your home.  You can ask for a higher price for the home and get a good rate of return.

For example, check out the following San Antonio property:

Booming south side market, 318 Elks Dr. San Antonio Texas 78211, lot size: .12 acres, 3 beds 1 bath, estimated rehab 7K, paint interior/exterior, plumbing/electrical up to code, Max ARV: 85K, Asking Price: 49K, sold comps are excellent in this neighborhood.

Max ARV: $85,000
Asking Price: $49,000

Exit strategy: owner finance, 5k down payment, 85K sales price, $850 monthly PI/TI, 30 year amortization, 10% interest or rent $850 monthly.

This home is $49k and needs only $7k of rehab to sell it, in my opinion. Thus you are in at $66,000 and can sell it for $85,000 (ARV) and charge 10% interest and make $850 per month.

Those terms are pretty typical for this type of house, but as the bank, you can charge whatever you want. If you ask too much, you may take months to sell it. But if you negotiate lower terms, you can sell it faster.

We strongly recommend as a real estate investor having at least some of your real estate portfolio as owner-financed properties, especially in San Antonio.

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Converting Investors’ Rentals to Owner Finance Was the Best Decision Ever

Before the market crash, two of our biggest investors owned more than 100 rental properties. Like many investors, they once thought that owning rental properties was the only way to make money in real estate investing.

What they found was that they were often dealing with repair problems.  It didn’t matter that they had property managers. When you own 100 houses, you always have to deal with a repair, a late bill, a vacancy, paperwork and so on.

They also found it was hard to know what their cash flow on each house was each month. Writing checks for new water heaters and fridges gets old fast!

It was around 2009 that one of our investors’ mentors talked to them about switching to owner finance so they could retire with millions in real estate. That mentor only did owner finance homes.

Rather than being a landlord responsible for property upkeep and repairs, there are more efficient ways to generate monthly cash flow.

Be the Bank!

Think about your own house. Each month you send an electronic payment (or check) to your mortgage company or bank. Your bank doesn’t have to maintain the property – you do. Since you are buying the property from the bank on terms, it is natural to your benefit to maintain the property. The bank knows that statistically, homeowners are much more likely to keep their houses in good repair than renters. That’s what makes holding mortgage notes so attractive.

Our mentor taught our investors they could be the bank for people who do not have the credit history to qualify for a regular mortgage loan. The investor carries the loan on the distressed property for 30 years just like the bank, and the new owner of the house simply pays a mortgage payment each month that includes taxes and insurance.

The mentor said to our investors –  why should you spend $10s of thousands on rehabbing a property when you can have the end buyer do most of it? Owner finance investment property is smart.

The end buyer usually has a vested interest in maintaining their property, as they own it.

How a Typical Owner Finance Property Deal Looks:

$62,000 cash purchase, $10,000 rehab, 50 DOM, sold for $89,900 owner finance, $937 per month, 12.3% ROI.

This 3 BR 1.5 bath property investment with positive cash flow north of downtown San Antonio TX is in a heavily revitalizing area. It was bought by the investor for $62,000.

The under-market value property only needed approximately $10,000 of rehab, including new flooring, paint in and out, and minor foundation work.

The total project cost to the investor for this under-market value property was $72,000.

Within 50 days of the completion of rehab, it was sold with owner financing with the following terms:

  • $5000 down
  • $89,900 final price
  • 10% interest
  • 30 year note
  • $937/month PITI positive cash flow
  • Cap rate 12.3%

After our investors converted most of their under-market value properties to owner finance, most of of their worries about properties disappeared. The owner maintains it and the investors simply enjoy the monthly cash flow from each property into their bank accounts.

Most people don’t seem to ever consider owner financing their property investment, probably because they don’t know about it.

The keys to success in owner finance property are simple:

  • Carefully documenting the income of the potential buyer and verifying their work history
  • Follow the Dodd Frank law, which mandates that you must collect proof of their income and document their work history.
  • You can have a Texas licensed loan originator do this for you for a $750 or so fee (we have one on staff).

The bottom line on owner finance investment property is you enjoy cash flow without maintenance and the buyer enjoys buying their own home at last – a true win-win for everyone.

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How Our Investors Buy Investment Properties in Texas Below Market Value

The most important factor in our big investors’ success in buying the best San Antonio investment property is every house they buy is under market value. That is, they buy under market investment properties that need rehab.

How To Determine Market Value

One of the biggest reasons many investors we have become real estate agents is so they can determine market value of the best below market value San Antonio investment property on their own. It is never a good idea to use Zillow to determine market value of a property. Zillow is notoriously off base, especially when you are dealing with off market properties or an out of state investment property that are not in the MLS.

Also, bear carefully in mind that the value that you come up with will largely depend upon the repairs your under market value properties need. Our investors like buy properties that are at least 20% under market value. So if the house is worth $90,000 and needs $25,000 in rehab, buying the house at $115,000 is a waste of time and money. They want to buy that house for at least 20% under $90,000, or about $72,000, so they can make a good profit.

How Investors Buy Under Market Value Properties

There are several ways that our investors use to buy under market value properties in San Antonio TX, one of the best cities to invest in real estate:

  • Buying fair market sale houses: These are houses that are owned by a private person who has equity in the house and there is no bank involved. Most of these sellers are in no rush to sell, so this can be tough. But our investors have bought many under-market value properties in estate sales; that is where they find most of their deals. In many cases,  there are several children involved and they just want to be rid of the house that needs repair.
  • Buy off market properties: Given our investors’ level of success in real estate investing, they tend to find many good deals that are not in the MLS. Agents and investors in the business send our site and top investors below-market deals. Of course, you need to get experience in the business to work this way, but know that if you do become successful, good deals often find you. We currently are analyzing several below market value properties that we will post on this site soon.
  • Buy REOs under market value: These are Real Estate Owned properties, and these are houses that the banks have foreclosed on. REOs are usually in the MLS, and some of them will be repaired and some will not. Of course, REOs are tougher to find now and many of them need a lot of work. To make your offer more attractive, you may want to tell the seller you don’t need to do an inspection. Pay all cash if you can – cash is king!
  • However you buy your under-market value investment property or out-of-state investment property, do not spend too much money on the rehab. Rehabs are where many investors lose their rears. Spend too much on your rehab and you will never make any money. Our top investors own a construction company and are able to do rehabs for 50% less than most contractors on the best San Antonio investment properties.

That in short is how our investors buy below-market value properties in Texas. The big thing to remember is to stick to your guns on your numbers – if you need to buy that house 20% under market value to make money, don’t go over it. Move on to the next under-market value property deal if you have to – there are lots of them out there!

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SOLD – 1126 Grand Valley, San Antonio TX 78207

Minor fixer upper can be transformed into a money-making machine. This home is west of downtown,  close to the river walk, museums of Art, best Mexican restaurants, Pearl District, El Mercado, Ranger creek brewing and Distiller, Farmers Market, First Fridays, Fiesta, San Pedro Springs Park and so much more

1126 Grand Alley San Antonio TX 78207 1 bed 1 bath, 412 sqft, lot size: .06 of an acre.

Price: 55K cash

 Home is occupied: $550 (long term tenant)

Estimated repairs: 5K. paint, minor plumbing, minor electrical, trash removal, fence repair, rodent removal, broken window.

Exit Strategy: buy/hold/rent – and wait for appreciation.

Estimated rent: $700-$800

Rental-Comps-1126-Grand-AlleyDownload
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FOR SALE – 1004 Monterey St. San Antonio TX 78207

With some attention and gentle care this can be your money-making investment. This home is west of downtown,  close to the river walk, museums of Art, best Mexican restaurants, Pearl Distric, El Mercado, Ranger creek brewing/Distiller, Farmers Market, First Fridays, Fiesta, San Pedro Springs Park and so much more … 

1004 Monterey St. San Antonio TX 78207 1 bed 1 bath, 448 sqft, lot size: .05 of an acre.

Price: 59.5K

Estimated repairs: 1-5K. paint minor plumbing, minor electrical.

Exit Strategy: buy/hold/rent – and get ready for massive appreciation.

Estimated rent: $700-$800

See photos and comps below!

rental-comps-1004-MontereyDownload

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FOR SALE OFF MARKET – 5222 Lark 78228!


Investors!

We have a 100% off-market property available in the growing community of Culebra Park in 78228! Below is the full listing as of April 26, 2025!

Booming real estate investing location! We offer this 4-bedroom, 2-bath San Antonio fixer-upper west of Saint Mary’s University!

Address: 5222 Lark, San Antonio Texas 78228, 

Type: 4 beds 2 bath, estimated 1488 sqft, built: 1948, lot size: .172 acres (large front/back lawn). 

Price: $64,900 cash or hard money

ARV: Estimated ARV: Low is $199,000, high is $299,000 with owner financing

Tax Value: $177,000

Rehab: Estimated rehab 75K: foundation, roof, plumbing, electrical, kitchen/bath update, flooring, sheetrock/texture, paint, windows, landscaping.

Exit Strategy: – Owner finance or rent for a fantastic buy and hold!

Comps: 5222 Lark

Contact: Text Joseph Pickett – (210) 421-7533, or use our contact form!

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SOLD – 117 Mebane St. San Antonio TX 78223

With some attention and gentle care this can be your money-maker, under market value investment. This home is located within walking distance to the south part of the river walk, 117 Mebane St. 3 beds 1.5 baths, 812 sqft, lot size: .17 of an acre, repairs needed to owner finance 10k: stabilize foundation, plumbing/electric up to code, fresh paint kitchen/bath, patch up roof leak, repair sheetrock damage on ceiling, lawn maintenance. 

Exit Strategy:

Owner Finance with 10k in repairs, then resale at $109,000.00 $1,100.00 monthly mortgage includes PI/TI,  30 year amortization, can sell note after 1-2 years

Rent: $1000 with 10K in repairs

rental comps 117 MebaneDownload
sold comps 117 Mebane StDownload
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SOLD – 421 Avenue C, Seguin TX 78155

Nicely remodeled home, rent andor owner finance ready, walking distance to Texas Lutheran University, Wood Laminate Floors that shine throughout house, Recent Paint, New Lighting Fixtures and Ceiling Fans. The New Refrigerator and Stove/Range stay with the property, 421 Avenue C, Seguin TX 78155-3733, 2 beds 1 bath, 888 sqft, large lot: .12 acres. Minor leveling needed 5K repair. Price:64K cash.

 Exit Strategy:

 Owner Finance with 5k in repairs, then resale at $99,000.00 – $1,000.00 monthly mortgage includes PI/TI,  30 year amortization, can sell note after 1-2 years.

Rent: $900 per month.

sold compsDownload
rental compsDownload