I first came to San Antonio as an under market value property investor years ago. Buying inexpensive, below market value investment property has enabled me to live a great, rewarding life. I have been able to make a good income and I continue to invest in under market value property today, which helps to revitalize San Antonio, one of the best cities to invest in real estate. In fact, I know many investors who used to buy only California investment property who now buy here.
Overall, San Antonio is one of the best cities to invest in real estate because of:
A rapidly growing population attracted to San Antonio and Texas low tax, pro business environment
Strong job growth even in down real estate markets. Even in the big downturn in 2008, San Antonio unemployment never went above 7% and now is down under 5%.
Diverse job base. San Antonio is not just about gas and oil. We also have a lot of manufacturing jobs, including Toyota, high tech employment and military bases.
Large population of hardworking blue collar workers, which drivers demand for owner finance properties and rental properties.
Coming into 2016, experts think that we will eclipse total home sales in 2015, which was 24,948, according to the San Antonio Board of Realtors.
Those three key drivers of home purchases – growth in jobs, steady mortgage prices and increasing home value, are not showing any signs of slowing in San Antonio real estate.
In fact, we actually are seeing not enough new homes being built to meet the demand. This is good news for the out of state investment property buyer – it increases demand and prices for our under market value investment properties!
I can definitely tell you that this is true about San Antonio real estate: My below market value investment properties that were $40,000 two years ago are now $60,000, and I usually sell my owner finance houses in under 60 days. Still, my many out of state investment property buyers earn 12% ROI on these under market value houses. Anyone considering, say, California investment property, would be happy with these numbers.
As of now, the median home price in San Antonio, one of the best cities to invest in real estate, is up 6.8% from 2014, but still is only $192,000. Try to buy a house for $192,000 in California!
My best guess is that property values will continue to climb in San Antonio for at least two more years. It is a great time to buy San Antonio investment properties!
I’m a 21 year expert in San Antonio investment properties, and for the first eight years, I mostly did rental investment properties. However, during the market crash of 2008, I converted most of my under market value properties to owner finance investment properties.
That was a great decision! Today I am a financially retired owner finance investment property owner ((San Antonio – one of the best cities to invest in real estate). I have found that owning owner finance investment properties is generally better than rental properties.
If you are not very familiar with owner financing properties, sorry! I’ll explain:
Some people want to buy a home rather than rent, but they lack the credit to get a traditional loan. One option the under market value property investor has is to ‘be the bank.’ That is, you the under market value property owner can write a mortgage yourself to your home’s occupant.
The same terms apply as when you get a mortgage from a bank. Payments are made over time with an interest charge, taxes and insurance must be escrowed.
In my under market value properties with owner financing, I charge 10% interest, 30 year term. My buyers may refinance when they like.
Here are some of the advantages of owner financing for the below market value property investor (pay attention, out of state investment property searchers!):
Owner financed investment property can sell very quickly to your buyer. There is no bank involved, so after you do your due diligence on the buyer and get their down payment, you can go to closing right away. Once I have the buyers’ proof of income, I usually close on my owner finance investment properties in two weeks.
Owner financed investment property has a very good rate of return because you have no maintenance costs.
Owner finance investment property has a lot of peace of mind because I do not worry about what the next repair on the house will cost me.
In Texas, owner finance investment property is easy to foreclose on. If the buyer defaults, I repossess the house in 60 days and resell it.
Owner finance investment property is very attractive as an out of state investment property, because you are not a landlord. You just collect your monthly payment from your buyer electronically each month. It is great passive cash flow for the out of state investor.
The above advantages of owner finance investment property have made me quite wealthy at the young age of 38. I strongly advise all under market value property investors to consider owner financing instead of renting.
Now, if you are an out of state property investor, you might wonder, what would this mean for me? Well, let’s take a look at this San Antonio under market value property:
Address: 2229 W Hermosa Dr. San Antonio, TX 78201
Year Built: 1948
Description: Below market value property sale, 2 beds 1 bath, 769 sqft, lot size: .14 acres yearly taxes: estimated repairs: 35K (convert to 3 BR).
Max After Repair Value: $129,000.00.
Cash Price: $69,900.
Your cash outlay for this under market value investment property would be $105,000. The rate of return for an owner finance investment property here would be ~11%. Your monthly income would be $900 per month after you pay taxes and insurance.
You have no other expenses.
Meanwhile, if you rent this property, you will also net approximately $900 per month, but you will also have a property management fee of approximately $95 per month, plus repair expenses of $500 to $1000 per year. Your ROI will drop to approximately 10%.
Of course, some under market value property investors buy Texas investment properties to enjoy depreciation and writing off expenses for tax purposes, and there is nothing wrong with that! Personally, I prefer the pure passive cash flow from owner financing investment properties.
As a financially retired expert in under market value investment properties in Texas (San Antonio – one of the best cities to invest in real estate), I always purchase my below market value properties for cash flow – never for appreciation. Anyone considering California investment property – take note! Appreciation is a crap shoot. Cash flow is forever.
You can retire young with appreciation, but there is some luck involved. With cash flow investment properties, you can be a master of your own destiny.
Instead, I invest for cash flow in all of my below market value properties. I make at least 11-12% ROI on each of my under market value investment properties in San Antonio, which I find one of the best cities to invest in real estate. Here’s exactly how I do it:
I find an under market value property.
I buy it cash for at least 20% under market value (or I move on)
I do $25,000 or so in rehab.
I sell it with owner financing at 10% interest, $5000 down.
That is it, my friends. That is the simple secret to investing in under market value properties and making millions. Each one of my San Antonio investment properties makes at least $500 per month in passive cash flow. If my houses appreciate, great – I may sell one or two and make $20,000. But that is rare.
Banking on Real Estate Appreciation Gets Investors Hosed
A huge mistake that many new real estate investors make when buying under market value property is that they have no passive cash flow. Their hope is that the houses will go up in value. That is pure speculation, and you only want to speculate when you can afford to speculate.
When I first buy my under market value property in San Antonio, I do about $25,000 in rehab, but I am careful to not overdo it. Over rehabbing is another landmine that many real estate investors step on. Not me. I do enough rehab to get the house sold. I research the under market value properties in the San Antonio neighborhood to get a good idea of how much rehab to do. Once I sell the house with owner financing, it is producing positive cash flow for me.
The advantage of doing owner financing instead of renting is all the repairs are on the buyer. I do not spend a penny on fixing the house after the rehab is done. Cool huh?
The Disaster of Negative Cash Flow
Many real estate investors buying for appreciation routinely low ball their monthly expenses. I’m talking vacancies, repairs, interest on loans, etc. Most new investors will not account for what they do not know, because they so much want to see positive cash flow. Remember – when you underestimate expenses, you are not thinking. You’re feeling. Don’t do that. Buy the best cash flow investment in your area, or another area.
I Never Try to Predict the Real Estate Market
Well, I do try to take a guess on where things are headed (I think we will see a booming real estate market in San Antonio for at least two more years). But I am never going to bank my income on whether or not my educated guess about the local real estate market pans out. No thanks.
It is a lot safer to invest for cash flow and never appreciation. Buying my little under market value properties in San Antonio has made me quite wealthy at a young age. So that is what I recommend most investors do – invest in the best cash flow investment you can find.
Many aspiring under market value property investors cannot buy properties that generate cash flow in their area. San Franciscans and Seattlites, you know what I’m saying right!?
So, many under market value property investors want to diversify their investment property portfolios by investing in below market value properties in other parts of the country. But where are the best cities to invest in real estate for out of state investment property?
Below are some of the best cities to invest in real estate, in my opinion.
San Antonio!
Of course, I live and work in San Antonio, and I am a bit biased. But our investors love San Antonio, live here, and love to invest here. so please indulge me. Real estate investment properties San Antonio rock because of the following:
Strong job market – there are many types of industry here – oil and gas, military, technology, and all kinds of international corporations attracted to the pro business environment, low taxes and lack of red tape in Texas.
Strong population growth: San Antonio is one of the fastest growing cities in the US.
Hard working renters and buyers: We have a large population of blue collar Hispanics here, and they make great renters and buyers.
I usually make 10-13% ROI on my owner financed investment properties in San Antonio TX, with an initial cost of $50,000 to $60,000. This makes San Antonio one of the best real estate investment cities for out of state investment property.
Dallas
Dallas also has a very strong economy and relatively low real estate costs, compared to California. Dallas also sees strong price appreciation, and strong rents compared to property values. Many investors in Dallas can earn almost a 20% return for under market value residential real estate – not bad! Also one of the best real estate investment cities.
Kansas City
I know several investors who have done very well in Kansas City turnkey properties. Prices in this Midwest city are very low and the population is growing quickly. I know people doing well with out of state investment property in Kansas City.
Milwaukee
I also know a bunch of under market value property investors who moved into the Milwaukee market because of rock bottom real estate prices and fairly high rents. If you need a reference for Milwaukee turnkeys, let me know; I know some good ones.
Charlotte
I have read that Charlotte is going to be seeing strong appreciation in the next five years. This could cause your initial costs for investment property to be higher, but if you want appreciation, this could be a good bet. I also know good turnkey companies here.
In short, there are many excellent cities to invest in real estate, you just need to find a good, reliable team on the ground. I know a lot of real estate investors around the country, and am always happy to provide a referral.
Many investors wax poetic about the magic of leverage in real estate investing. That is, they say that by taking out a mortgage on an investment property and using a 10-20% down payment, you can buy more under market value properties and generate more cash flow.
I respect their position, but I disagree.
You can retire young by buying all cash investment property in San Antonio TX, one of the best cities to invest in real estate. These are some of the best San Antonio real estate investments. Buying here in Texas is often better than say, California investment property, because you can buy so many houses with not much cash.
Why Do I Buy All Cash Investment Property?
I prefer incurring the lower risk that comes with buying properties all cash. My under market value investment property portfolio is:
Stable
Flexible
Can be sold quickly when and if I need to
By investing in all cash real estate properties, I have invested my money into a tangible asset that will usually produce cash flow, and may appreciate somewhat over time (this is not my priority – cash flow is).
All cash real estate sales have dropped but still are 30% of the market.
I also buy cash real estate San Antonio because I always owner finance my under market value investment properties. Many real estate investors take out mortgages and rent their properties. That isn’t my model. I buy all cash real estate and then owner finance at 10%. I get superior cash flow over 10% per year and also have no landlording costs with San Antonio investment property.
When I Buy All Cash San Antonio Investment Properties
I typically pay $40,000 for the under market value property, and about $25,000 for the rehab. So I am in the deal for $65,000 and then owner finance it for fair market value – approximately $90,000. That property owned all in cash generates $800+ per month of positive cash flow.
If I had a mortgage on the house and rented it, I would have only $300 to $400 per month in cash flow, and also would have repairs.
For me, I buy only for long term, maximum cash flow when I buy property all cash in the best San Antonio real estate investments, one of the best cities to invest in real estate, IMHO. It’s a good city to own an out of state investment property because houses are cheap, there are lots of qualified buyers, and cash flow is excellent especially with owner financing.
More Considerations When You Do All Cash Investment Property
I don’t worry about a bank giving me a mortgage for investment properties. I can close fast – in 10 days. That gets me some great under market value properties.
My real estate investment portfolio is safe and stable. I never worry about having a mortgage to pay when a renter skips town.
I incur less risk as I do not worry about appraisals on my properties. If your lender sees lower appraisals in your neighborhood, they may loan you less money.
In the real estate crash, I sold several of my all cash investment properties quickly when I needed money from my San Antonio investment property.
Buying all cash investment properties usually means you buy in affordable cities. Make sure you do research to figure out where to buy your all cash investment property. As of right now, prices are up in some markets, but if you save your cash, you may be able to pick up houses for a substantial discount in the next downturn.
In short, I recommend that people looking for an out of state investment property buy property all cash, as that is the best way to enjoy maximum cash flow with low risk.
If you are an investor or possible investor in California, you probably know the answer to that question! Many of my out of state investors in California cannot believe the sky high cost of investment properties in many of the high population areas of California, such as San Francisco, Los Angeles and San Diego. Great places to live, but for positive cash flow investing? Not so much! California investment property is very expensive.
If you are thinking about buying an out of state investment property for passive income, here is a good simple guide that can help:
How to Select Your Out of State Investing Market for Passive Income
Where you are going to invest in under market value properties depends on your real estate investing goals. Are you a flipper or a buy and hold investor? If you hang around my site long, you’ll learn I retired early with buy and hold investment properties that are owner financed. I’m a big believer in buy and hold long term cash flow – that is how I financially retired at just 28 in San Antonio – one of the best cities to invest in real estate, in my humble opinion.
Anyway, a good buy and hold market for passive income might not be the best flipping market. Here in San Antonio TX, flipping has gotten tough as the economy is booming as of January 2016; it’s hard for flippers to get properties cheap enough to make a good profit. For buy and hold investing though, I still make 10-12% per year, or $500-$700 per month in positive cash flow.
I’m biased, but TX is a great place for out of state investors – the population is soaring due to job growth.
As you think about where to buy out of state investment property and under market value properties, consider:
State law: Is the state friendly to property owners? You want to invest in a state that makes it easy to evict tenants or to foreclose. State that are tenant friendly, such as CA, make it so hard to evict or foreclose, you could lose your shirt.
Price to rent: What does rent cost compared to the price to buy? In my town, it’s 16.90, while in San Francisco it’s 30.05. Whoa! No wonder so many CA investors are investing in out of state investment properties.
These are not all the factors to consider when you are buying an out of state investment property instead of California investment property, but if those three areas look favorable, you probably could do well in that market and financially retire early as I did, in one of the best cities to invest in real estate. San Antonio investment property is excellent for cash flow.
How To Find Out Of State Investment Properties and Under Market Value Properties
Now that you know which market to buy your below market value investment properties, how are you going to locate that house? Most investors I know do it two ways:
They find a good real estate agent investor who is hooked up with excellent contractors, property inspectors, title company, real estate attorneys.
They find a good turnkey property provider. The house has been totally rehabbed and usually has tenants or buyers in place.
Which of these routes you go with will depend upon your investing goals again. Some out of state property investors want to have absolutely no headaches or management worries, so they just buy turnkey properties. Other out of state investors think that method is too expensive, so they manage their own rehabs and property management.
If you decide to find your own below market value properties in your chosen market, here’s what you’re looking at:
Buying Below Market Property Yourself
Advantages
You’ll get the house at a low price
High cap rate or ROI
Disadvantages
The house will not be producing income during the rehab and the time it takes to find a renter or an owner finance buyer
Rehab costs could shoot up if you don’t have reliable partners
Harder to manage the rehab and management from a distance
Difficulty in controlling material costs
Buying Turnkey Property
Advantages
Totally rehabbed
Tenant or buyer may already be in place
No work for you
Cost of material more predictable and stable
You know the quality of work you will get
Whole investment team is in place
Disadvantages
Higher initial cost
Lower ROI or cap rate
How big a difference are we looking at between buying a run down under market value house and buying a turnkey? Let’s take a look:
Run down property: Estate sale, $30k purchase, $30k in rehab – will produce 13% ROI with owner financing or renting.
Turnkey property: $80k purchase price, no repairs, will produce 9-10% ROI with owner financing or renting.
So which will it be? Most people would say you obviously go for the better ROI with the under market value property you do yourself. But remember, you are going to have to do a heck of a lot more work – at a distance – with the fixer upper property. A turnkey property will earn lower ROI, but it a lot less stress. At the very least, you might consider a good turnkey property if you are a beginner in real estate investing. That way, you can make some good positive cash flow as you develop your own investment property team.
It all boils down to how you look at investing in real estate. Investing by definition means using something to get some type of return. You just have to decide if you want to use just your money to get a return, or use your time AND money to get a potentially higher return.
Choose wisely based upon your personal investing goals, and you will hopefully be able to be financially retired on your time table.
Personally, if I were a usual buyer of California investment property, San Francisco investment property, Los Angeles investment property or San Diego investment property, I would strongly consider buying out of state investment property. Investment property is all about real estate cash flow…..it’s something you can rely on year in and year out, unlike hoping for appreciation.
I can’t tell you how many people I run into in my under market value properties career who have good jobs and hate their lives.
That is, they make $200,000 or more per year and yet, they work 60 hours per week, sit in dull cubicles for years and years, and wish they had the time to do what they want to do.
The truth is, most of us have been conned into thinking that the ONLY way to live in America is to trade time for money.
Passive income is the way to go – with under market value properties – at least 20% below market value. Who wants to sit bored in a cubicle or office for most of their working life? It’s a form of slavery, even if you are well paid.
But a guy or gal like you…..you make $200,000 per year or more out there in California or Washington….you most likely have some capital stored up so that you can buy under market value investment properties, and STOP trading your time for money. This type of out of state investment property is perfect for you. Passive income fast.
Here is a quick plan to stop trading your time for money TODAY. I am going to assume you have some capital to work with (if you don’t, go find some private investors to borrow money from.
If you live in a high cost area, strongly consider buying an out of state investment property.
This under market value investment property is one that I have scouted out carefully in a very hot part of 78201, which is north of down town San Antonio. It is seeing a lot of young professionals moving in and property values are shooting up. There is a good chance you could get a young professional buying this under market value property from you, or a hardworking blue collar family:
Address: 2229 W Hermosa Dr. San Antonio, TX 78201
Year Built: 1948
Description: Distressed property sale, 2 beds 1 bath, 769 sqft, lot size: .14 acres yearly taxes: estimated repairs: 35K (convert to 3 BR).
Max After Repair Value: $129,000.00.
Cash Price: $69,900 firm.
Exit Strategy: Owner finance 10% interest rate, $5000 down, 30 year note, $1100 per month PITI. Plenty of positive cash flow.
10% ROI no maintenance.
Here’s how you can retire early in one of the best cities to invest in real estate – Buy under market value properties just like these with cash or with borrowed cash. I do $35,000 in rehab. Then resell the house with owner financing to a qualified buyer. Simple!
The above out of state investment property will make you $1000-1100 per month, assuming you fund the deal with cash from your $200,000 or whatever job. In time you will be able to financially retire.
That’s it. Buy, rehab, resell, and collect the cash flow. It IS that simple. Lather, rinse and repeat.
I buy under market value properties in San Antonio TX. As the real estate market continues to heat up in San Antonio, more people are jumping into the real estate investment business.
Many people who start to invest in under market value investment property in San Antonio end up never making money or losing a lot of money. That goes the same for people looking for out of state investment property.
Most often, people run into real estate investment problems because they are impatient or do not have a good, long term plan for good cash flow on below market value property.
I have been successful with my San Antonio investment properties (I financially retired at 28) because I have a very simple plan that I always stick to:
I buy distressed San Antonio homes for 20% or more under market value, and resell them with owner or seller financing to make a 20% return long term. The vast majority of my portfolio is long term buy and hold in the best San Antonio investment property.
Of course, buying good distressed properties under market value in San Antonio is not easy. If it were, everyone would be buying them and retiring early!
Here is the most common mistake I see by far in people who buy distressed real estate properties and out of state investment property: They pay too much for the house and have very little cash flow!
They buy the house often at the top of the market, and the only way they make cash flow each month is if the property is always occupied, and there are no maintenance issues.
As soon as something goes amiss, they end up losing money each month and have no cash flow in their under market value San Antonio investment properties.
The biggest piece of advice I can give you is to always pay as little as possible for the investment property in the best cities to invest in real estate. If you are not skilled in negotiation or are just a beginner, you need to work with a skilled investor who can help you to get a low price on that below market value house.
If you have questions about investing for cash flow in under market value San Antonio houses, please contact me! I always can use cash partners and both of us will make a good profit in the best San Antonio investment property.
