How I Own High ROI Investment Properties with Just $2000 in Repairs

One of the challenges of dealing with rental investment properties in San Antonio and other places is that they cost money to rehab and maintain.

When many San Antonio real estate investors purchase under market value properties, the normal scenario is something like the following:

  • Buy an under market value San Antonio fixer upper for $50,000.
  • Stick $25,000 into it to get it ready to rent.
  • Rent it out for $900 per month.

That is a perfectly acceptable way to generate cash flow with buy and hold real estate investments.

But what if you can buy the house cheaper than that, put only a few thousand into it, and get it occupied for about the same monthly payment?

That is what I do on many of my San Antonio investment properties. Take a look at this very nice, incredibly inexpensive $35,000 San Antonio fixer upper deal:

Front

Address: 1707 Gorman, San Antonio, TX 78202

Description: Stunning large lot with positive cash flow, under market value, booming San Antonio Market, very popular location east of downtown, 2 beds, 1 bath, 654 sqft, lot size: .22 acres, estimated repairs: 2K, minor electric, clean/lawn maintenance. After Repair Value: 61K,

Price: $35,000.00 cash firm.

Exit Strategy: Owner Finance San Antonio investment property with 2k in repairs: 3-5K down, $600 monthly PI/TI, 30 year amortization, 10% interest, Price: 61K


On this investment property, I got it under contract for just $39,000 (prices in my areas have been dropping lately). And rather than rent out the property – which would require $25,000 or more of rehab, I just do $2000 to clean it up.

Then, I find an owner finance buyer interested in buying the property from me on terms of 30 years, 10% interest, $5000 down. That way, I leave most of the rehab to the end buyer, and I can enjoy a very high rate of return without doing any repairs.

Owner financing a house successfully requires me to do my homework. I need to make sure of the following:

  • The buyer has enough income to afford the payment and to live with the other normal life expenses.
  • They have a stable job for at least the last two years.
  • They have a $5000 down payment.

Most of these buyers have poor credit, so it is up to me to find good buyers who can pay me on time. If they don’t, we foreclose and get them out in 60 days, and get another buyer in there.

That’s the cornerstone of my San Antonio investment property portfolio – buy and hold with owner financing with limited repairs of $2000 to $5000. ¬†What do you think?

I Continue to Buy and Hold With Section 8 Rental Properties in San Antonio

I hold a lot of San Antonio owner finance properties but in recent years I have been doing more section 8 rentals for San Antonio investment properties.

Some people do not like section 8 rentals because they think they can have more problems with those types of renters. However, I find that generally, using section 8 with the San Antonio Housing Authority works quite well.

Section 8 rental property can work really well for the out of state investor who wants to reduce taxable income and enjoy depreciation and write offs. As much as I like owner financed property, you cannot write off anything or reduce your taxable income with depreciation.

I have been doing section 8 rental properties in San Antonio for several years and I have found there to be many great advantages:

  • You will always get your payment electronically on time. You never have to worry about chasing down rent payments.
  • If the economy goes down, you do not have to worry about the San Antonio renter losing his job. The voucher will always pay their rent.
  • I can often charge more rent to a section 8 tenant.
  • I really love how easy it is to market for section 8 renters. All I have to do is post the San Antonio buy and hold property on the GoSection8.com website and I start to get calls from potential renters.

Of course, it is very important to screen the potential renters carefully. I do background checks and credit checks, and I always verify employment. I want to have potential renters that have a voucher that covers the rent, and I also want them generally to bring in at least $1500 in additional income per month, and I increase that if there are several children in the house.

Last, doing section 8 rental property allows you to leverage your money. You can often do a 20% down loan on a San Antonio investment property, and then do the rehab. Once it is occupied for a few months, you can cash out refinance about 80% of the ARV and use that cash to buy more property. This is a quick way to build capital and buy and hold cash flow.

In short, doing section 8 rentals with San Antonio wholesale property is a really fine way to increase your net worth and cash flow.