Now Is a Great Time for Cash Flow AND Appreciation in San Antonio

When I first started investing in San Antonio TX in under market value properties, I did not typically see a lot of appreciation on my properties. Most of the San Antonio fixer uppers I invested in saw appreciation in the range of 2-3% or maybe 5% per year maximum.

But that was more than 15 years ago since I started to invest here, having financially retired nearly 10 years ago. Today, I am seeing more possibilities to both enjoy appreciation AND cash flow on under market value fixer uppers in San Antonio.

Today, there is a general affordable housing shortage in San Antonio. It is harder for lower income renters and home buyers to find places to live. This is creating real opportunities for real estate investors in Texas. Also, we are seeing major investment into San Antonio in the downtown area. This is coming from the state and city government, and also out of state and even out of country investors.

For example, the Pearl Brewery off of 281 near downtown was a real hellhole in 2008. It was abandoned, run down and not somewhere you would either want to live or invest. However, an outside investor poured nearly a billion dollars into the Pearl Brewery complex. Today, it is the second hottest tourist attraction in San Antonio, after the downtown Riverwalk. It is full of nice hotels, chic restaurants, and bars, and is a general great hangout spot for San Antonians and tourists alike. Very expensive townhomes of $500,000 and up also are being built around the Pearl complex.

There is plenty of other development occurring in San Antonio that is leading to good appreciation and cash flow potential for affordable home investors. For example, the area north of downtown, not far from the Riverwalk, is also near the new San Pedro creek extension. The city is pouring billions of dollars into this area. Properties located in this region are believed to be poised for appreciation of 50% or more in the next three years.

I have a property at 1614 Alametos 78201 that will return the investor at least $900 per month in rent, and with a potential ARV of $199,000. That is some serious appreciation for a home that is worth $69,000 today.

We also had a property on 1622 Alametos that we sold in 2015 for $65,000. The investor put $15,000 into it, and sold it with owner financing for $99,000. Today, that home is easily worth $115,000.

So, I recommend buying certain homes in San Antonio today in areas where the city is investing money. You should see substantial appreciation and good cash flow.

San Antonio Housing Market Was Red Hot in 2016

The housing market in San Antonio in 2016 was hot as home prices went to the highest levels ever. The local paper reported that 29,508 homes were sold, which was more than an eight percent increase from 2015.

The median price for San Antonio real estate increased six percent to $204,300. This was the very first time that the median sales price had been over $200,000 for an entire year, including the real estate boom years of a decade ago.

Also, the inventory of homes that are available dropped in December 2016 to only three months. this indicates there are more buyers than sellers in San Antonio.

So what does this mean for San Antonio real estate investors? Well in my experience, it means that real estate prices are going up, and buying homes for many people in San Antonio is becoming more difficult. For people who earn a good income of course, the homes in San Antonio are very reasonable.

But for people who earn $3000 per month and don’t have credit, buying a home with conventional financing is very difficult. That is the reason I focus my San Antonio investment strategy on owner financing.

Here is a good example of an under market value property that I am selling right now:

  • Finance Your Investment Properties
  • Address: 1319 S Hamilton St., San Antonio, TX 78207
  • Year Built: 1956
  • Description: San Antonio buy and hold investors and real estate investors  – Another Major cash flow opportunity, 30% instant equity under market value, almost cute cottage, needs minor help, booming San Antonio Market West of Downtown,  2 beds, 1 bath, 616 sqft, lot size: .05 acres, estimated repairs: 5K, clean/lawn maintenance/interior paint/front paint. Max After Repair Value: 69K
  • Cash Price on San Antonio Fixer Upper:  $42,000 CASH ONLY
  • Exit Strategy: Owner Finance with 5k in repairs: 5Kdown payment, $695.00 monthly PI/TI, 30 year amortization, 10% interest, Sales Price: 69K, see attached sold/rental comparables.
  • Sold and Rental Comps: Sold Comps 1301 S Hamiltonrental comps 1301 s hamilton

This property is only $42k cash, and with $5k in repairs, you can sell this with owner financing (you’re the bank), to a family with job and income but no credit. The major advantages of this type of deal are that you do not have repair expenses ongoing. Also, you can limit your initial out of pocket costs. If you were to rent this house out, you would have to do $20,000 in repairs, not $5000.

Owner financed homes is the backbone of my real estate investment portfolio in San Antonio. Each home earns at least 10% ROI with no expenses.  This type of buy and hold investing helps to support the working families of San Antonio as well, so it is a win win.

Why I Love Buy and Hold Real Estate Investing in San Antonio TX

I see five big advantages with buying and holding San Antonio investment property.

I Make Regular Income

Most investments offer either a regular return or appreciation. San Antonio real estate investments offer both! A really good buy and hold investment property, such as the one on Wagner St. listed below for an under market value price of $49,000, offers strong positive cash flow that offsets my expenses and any debt. It also provides me a nice monthly income.

If you read much about me on this website, I financially retired at 28 with more than $20,000 in monthly cash flow. Almost all of that was and is from San Antonio buy and hold investment properties. I do a flip now and then, but I much prefer steady $700 per month cash flow from lots of San Antonio fixer uppers.

Depreciation

Fixing and flipping in San Antonio is well and good, although it is harder to do in this appreciating market. I can tell because flippers call me wanting properties for .50 on the dollar! Yeah right, not in THIS market!

The great thing about buy and hold property is that the IRS lets you write off depreciation on the property over 27.5 years. This is ‘negative’ income but it’s just negative on paper, which helps my tax situation.

Equity Increase

If you have a mortgage on your San Antonio investment property, the cash flow lets you pay the mortgage without spending your own cash. And, each month, part of your principle is paid down. About 20% of each loan payment increases your equity in the property. You can then borrow some of that capital if you like to buy more investment properties.

Appreciation

Buy and hold investment properties can appreciate in value depending upon the state of the market. Most of my under market value fixer uppers in San Antonio appreciate at 3-4% per year. During the last crash, most of my properties did drop in value, but I was still able to have positive cash flow from them. I was even able to increase rents on some of them.

I am mostly a cash flow investor anyway; appreciation isn’t a big deal to me.

Leverage

If you put $20k into stocks and it increase 10% in value, you make $2000. Not bad. But if you put 20k into San Antonio investment properties, you can buy a $100k fixer upper with an 80% loan. If it goes up 5%, you made $5000 with only $20,000 invested!

Even if stocks have a higher return, it doesn’t matter because real estate returns are based on much more than the principle you invested.

If you are interested in San Antonio buy and hold investing, here is a great 15% or so ROI deal to get rolling.

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  • San Antonio Wholesale Property Address: 1515 Wagner Ave. San Antonio, TX 78211.
  • Year Built: 1949
  • Description:  Location Location! Cash Flow! Under market value, 3 beds 1 bath, 816 sqft, built: Lot Size: .14 acres, Yearly taxes: $600.00, Estimated yearly insurance $700.00, Estimated repairs: 15K, includes interior paint, electrical/plumbing up to code, landscape, trash removal, kitchen/bath updates, flooring, roof repairs.
  • Estimated Repairs: 15k
  • Cash Price: $49,000
  • Exit Strategy: Rent San Antonio investment property with 15K in repairs: $850-$900 per month — or Owner Finance with 15K repairs: 5k down, $900.00 monthly P/I, 30 year amortization, 10% interest, Price: 89K. 15% ROI is possible.

 

Buy and Hold Success Story – $50k Investment – $47k Return

Back in 2013, I sold my father-in-law his first San Antonio wholesale property: a $50,000 buy and hold deal a few miles north of downtown San Antonio.

This was a point in the market when we did not have to do much rehab on our San Antonio investment properties. He picked up this house for a bit under $50,000 and cleaned it up with a broom and got rid of the trash. The total investment was $50,000.

At my recommendation, he did a seller finance deal on this San Antonio fixer upper, under market value property with the following terms:

  • $50,000 cash purchase
  • $80,000 owner finance price
  • Zero rehab by investor
  • $806 per month
  • 14% ROI
hollywoodBefore Rehab – $50,000 cash purchase, zero rehab by investor, 90 DOM, resold for $80,000 owner finance, $804 per month, 14% ROI.
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After rehab, completed entirely by end buyer.

The owner of the property did a fantastic job on rehabbing it, as you can see by the pictures. But that is not the end of the story on this San Antonio investment property!

More Pictures After Rehab:

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In August 2016, the owner of the property decided to cash out my father in law. She paid him off with the proceeds of the sale of one of HER investment properties.

She paid him a sum of approximately $75,000, which is what was left on the mortgage. So, not only did he make $25,000 on the sale of the property, he also made approximately $22,000 in payments over 2.5 years! He made a total return of $47,000 on his $50,000 investment!

Now that is a fantastic San Antonio investment property return!

OFF MARKET – 308 Strong Ave, Ballinger TX 76821

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    • Address: 308 Strong Ave, Ballinger TX 76821
    • Year Built: 1900
    • Description:  Texas fixer upper cash flow king – 3 beds 1 bath, 1300 sqft, ¼ acre lot, yearly taxes: $500, yearly insurance: $500,
    • Estimated Repairs: NONE – Resell AS IS.
    • Cash Price: $18,000
    • Exit Strategy: Owner Finance this buy and hold under market value property with ZERO repairs: 2k down, $395.00 monthly P/I, 30 year amortization, 10% interest, Price: 39k. Strong demand for affordable houses under $500 per month here.
    • Contact us for more information or to make offer.

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Should I Flip or Buy and Hold? Yes!

People often ask me as a top San Antonio property wholesaler if it is better to flip or buy and hold? My answer is an emphatic ‘yes!’ Of course, it is a complex question and which type of real estate investment strategy you are going to focus on right now depends upon many factors.

When I first started as a San Antonio investment property investor, I focused mostly of flipping San Antonio houses. There was a good reason for that: I didn’t have much money! I found $2 million worth of private money and flipped 50 houses in my first year.

Many real estate investors like to focus their careers on flipping properties because they can (in theory) get their profits quickly and have their money tied up for as little time as possible. Another benefit of flipping is that it does not have the property management and long term holding costs that buy and hold investments have.

However, I am of the strong opinion that flipping San Antonio properties should be a short-term tactical strategy…like what I did when I started my investing career. Flipping a bunch of San Antonio properties was a means to an end: so that I could buy and hold a large portfolio of rental and owner financed properties.

Flipping Is Getting Tougher in San Antonio

I talk every week to investors who simply want to flip houses all the time. Or, they want to flip 5-10 houses per year, make $10,000 each, and eventually get into buy and hold real estate.

That is a viable strategy…..sometimes. However, the San Antonio real estate market continues to go up in value in 2016, and finding under market value properties in the 50-100k range (let alone the 100k+ range) that can be flipped for significant profit ($5000 or more) is getting tough.

In fact, it is getting so tough that last week I turned away three potential investors with more than $100,000 each to invest. I do not like turning away investors with six figures to invest in San Antonio real estate, but they wanted to only do flips.

As I have pointed out, flipping is hard to do profitably in this rising market now. Also, material costs have risen significantly due to the stronger economy.

Be Flexible!

There is nothing wrong with flipping houses, just as there is nothing wrong with buying and holding real estate. My best advice to many real estate investors is this: Be flexible in your investing strategy!

Many real estate investors limit their profits and ultimate success because they get stuck on one type of investing strategy no matter the market.

Personally, I strongly believe in buy and hold long term for wealth creation, but I’ll do flips in the right market if they are profitable.

In my expert opinion, the current San Antonio real estate market is best for buying and holding real estate.

As the market here is changing, I am no longer recommending that people flip properties with me.

I am focusing mostly on buying and holding with owner finance, AND with section 8 rental property.

Why Section 8?

Section 8 gets a bad reputation in some quarters. I love Section 8! Consider:

  • You get a guaranteed electronic rental payment monthly
  • The rent is usually higher than market rates
  • The renter needs to take care of the house to keep their voucher each year
  • The GoSection8.com website makes marketing a breeze.

Naturally, I have to screen my section 8 renters carefully for work history, credit and criminal record, but I find that I can get a property rented in 4-8 weeks. Meanwhile investors can wait six months to flip a house and sell it retail.

Another benefit of buying and holding with section 8 is that you can buy the house cash, rehab it, get it occupied, and then cash out refinance the house and do another rental property. That’s a great deal!

Below is a great little under market value deal that needs only 11k in rehab, and then can be rented section 8:

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    • Address: 820 South San Manuel St., San Antonio TX
    • Year Built: 1950
    • Description: Under market value investment property, three bedroom, one bath that has 928 square feet. Beautiful home with TWO exterior storage units – this is a MAJOR selling point for the end buyer; most buyers are blue collar contractors, and they need their tools to be completely secure.
    • Max After Repair Value: $99,000.
    • Cash Price: $65,000.
    • Exit Strategy: Owner finance this out of state investment property with positive cash flow with only $10,000 in repairs completed in 30 days – $99,000, $900 per month, $5000 down, 30 year note, 10% interest. This San Antonio investment property offers passive cash flow with no maintenance.
    • Alternative Exit Strategy: Buy at $65,000, remodel $11,000, rent $1095 per month.

 

 

 

 

 

Investing in Real Estate and Building Your Rental Portfolio

As you are thinking about investing in real estate and building your rental portfolio, you can no doubt find many wholesale property companies in San Antonio to sell you properties.

I am a San Antonio property wholesaler like others in some ways, but with me, you will find a key difference:

I built myself a large portfolio of rental investment properties (and owner financed investment properties) practically from scratch in about 5 years, from 2001 until 2006. If the person selling you properties has few to no properties, how much do they really know about what they sell?

When I first got started in San Antonio real estate investing, I did not have much capital, only about $25,000. In my first year in real estate, I did 50 houses – San Antonio flip properties.

I did that by finding $2 million in private money from a retired doctor and investor in San Antonio. He loaned me in the money in small parcels and I bought under market value $30,000 properties, rehabbed them, and flipped them for a $8000 profit, which we split.

I was able to make $100,000 in my first year in real estate investing, and I re-invested most of the profits into buy and hold rental properties.

Now I am in the position where I have a very large portfolio of buy and hold properties, and I really do not need anymore properties for myself. I like to help other small investors develop their own portfolios.

I run across many small real estate investors in California that want to build a rental property portfolio but are priced out of their current market. I specialize in helping these investors maximize their available cash so that they can buy enough rental properties so they can quit their jobs within a few years.

Here is a typical real estate investing scenario I see:

  • California investor with a good $200,000 per year job and $100,000 cash or equity cannot buy anything in CA worth having.
  • He has steady high tech employment and good credit.
  • I recommend that you buy an under market value San Antonio investment property for cash at $70,000.
  • We do $35,000 in rehab on the fixer upper property. I make it really nice – with central air, tile, lighting, granite, really make it shine.
  • We then rent it out section 8 for the investor for approximately $1295 per month – ARV is about $139,000.
  • After the house is rented, the investor from California can cash out refinance up to 80% and do another section 8 rental property.
  • If he has a line of credit on his residence, he pays himself back with the line of credit from the first investment property, and then borrows another $100,000 and does another one.

This is one of the ways that I built a portfolio of buy and hold properties after I had profits from my San Antonio flips in my first few years in real estate.

So, if you are thinking about buying San Antonio wholesale property, I recommend that you find a 10 year expert in the business who not only can sell you a property, but has experience in building a cashflowing portfolio for himself.