Why I Still Think Buying and Holding San Antonio Real Estate Is the Best Investment

I became independently wealthy at 28 years old with buy and hold real estate investing in San Antonio TX. While I did do some San Antonio flips early on, I have found over time that making regular, steady cash flow on a lot of little San Antonio affordable houses is the real key to build my personal wealth.

Here are the five major advantages to buying and holding real estate investments in San Antonio, in my 15 year experience:

  • Income: Most investments you purchases offer a regular return, such as an annuity, or potential for appreciation in equity (stocks), but buy and hold real estate offers both of these. The best buy and hold real estate investments offset your expenses and debt, and also produce monthly positive cash flow of 5-10% per year. Meanwhile a typical annuity pays 3-4%.
  • Depreciation: Flipping houses in San Antonio is great and I have done my share, but the IRS is always going to get its piece of your real estate profits with flips. With buying and holding, you can write off the value of your San Antonio wholesale property over 27.5 years. This depreciation is negative income. However, it is only negative in a paper sense because your costs of upkeeping the property come out of your cash flow. So, depreciation losses reduce or remove your positive cash flow and reduce your taxes.
  • Building up equity: The cash flow from your San Antonio investment property allows you to pay your mortgage without spending your own money. Each month, also, part of your loan principle is paid off. About 15-25% of every loan payment will pay off the principle of your loan and add to your equity.
  • Appreciation: Your real estate investments can go up in value, and of course they can go down. The good news is that with properly cash flowing real estate properties, you are making profits regardless of what is going on in the market. My San Antonio properties did drop in value by 20% in the crash, but I was able to continue receiving income from them; in some cases, I even could increase the rents in the downturn.  As long as you have positive cash flow in downturns, you will be fine. I did great in the downturn five years ago with my San Antonio real estate investments. I bought and sold $2 million in real estate during the crash.
  • Leverage: If you put $25,000 into mutual funds, and it increases by 10%, you made $2500. If you put that same money into buy and hold real estate, you can buy a $75k property with a $60,000 mortgage loan. If it goes up 5%, you made around $3500, or a 20% or so return!! So, maybe the stock market has a better return on average but with buy and hold real estate, your returns are based upon a higher amount than your actual investment of principle.

As I said, I also flip houses, so this is not an either/or deal. But I like buying and holding affordable San Antonio properties because of the tax advantages, the passive cash flow, and the ability to scale. If I am holding 25 houses producing $500 of cash flow each, I have that each year, and as equity builds, I can refinance and buy more.

In summary, San Antonio buy and hold investing is the best ‘get rich slow’ scheme. You can over time create residual income, and also increase your equity exponentially as you pay down the principle, and also through appreciation and leverage.

If  you are looking for a good under market San Antonio investment property to buy and hold, here is a nice $48k deal:

Front

  • Address: 804 S San Eduardo Ave, San  Antonio, TX
  • Year Built: 1949
  • Description: Fixer upper, under market value 4 beds 1 bath, 816 sqft, built: 1949, lot size: .1 acres, yearly taxes: $1,200.00, estimated yearly insurance: $750.
  • Estimated Repairs: 30K, roof, central hvac, windows, plumbing, electrical, kitchen/bath update, interior/exterior finish. ARV $99k.
  • Cash Price: $48,000
  • Exit Strategies: Rent San Antonio investment property with 30K in repairs: $1,095.00 with section 8, no need to chase the monthly payment, San Antonio Housing Authority pays direct deposit to your account.

With this under market value San Antonio fixer upper, you can rent it section 8 for $1100 per month, and after 6 months, you can cash out refinance approximately $70,000 and do another rental property. Your cash flow on the above deal would still be approximately $250 to $300 per month.

 

How I Make Big Profits on San Antonio Buy and Hold Property

Many wholesale property investors in San Antonio and other areas are big into flipping properties for wealth building.

It is true that flipping houses in San Antonio can be profitable, and I sometimes do San Antonio property flips. However, the majority of my wealth building over time as a San Antonio real estate investor has been with San Antonio buy and hold property.

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This buy and hold property makes the investor in San Antonio 13% per year.

Below are simple steps to follow to buy a profitable buy and hold property as a San Antonio real estate investor:

#1 Locate the Right Buy and Hold Property at the Right Price

I always try to buy wholesale properties in San Antonio that produce 12-15% ROI per year, either through renting or owner finance. I also like to buy under market value San Antonio properties on the edges of neighborhoods that have houses worth $300,000 or more. The interesting thing about San Antonio wholesale property is that you can find $60,000 under market value fixer uppers just a few streets away from much more expensive properties. Those are the areas I target.

Here is a good example.

#2 Do the Numbers Make Sense?

Cash flow truly is king in buy and hold investment properties. You need to carefully determine how much you keep every month after you pay all expenses.

Many wholesale property investors buy and hold rental properties, and I have done some of that. However, I like to buy my under market value properties in cash, and then owner finance them.

The advantage to this type of buy and hold property investing is that the buyer of the house maintains it, and I just carry the mortgage on San Antonio real estate investment.

If you are doing buy and hold rental properties with a mortgage, really make sure that you are going to see positive cash flow, after all expenses, vacancies and repairs. If you are just barely paying the mortgage when you are fully rented and you have no major repair expenses, trouble awaits!

#3 Make Money at Closing

The biggest reason many buy and hold investors lose money is that they pay too much for the house. You MUST buy the house under market value to produce cash flow. You want to buy a San Antonio buy and hold property at least 20% under market value.

My investor paid 30% under market value for this house and now makes 16%.

#4 Manage Tenants Right

I buy and hold properties with owner financing, so I don’t have many tenants. But if you do rental properties, you have to very carefully screen tenants. You also can hire a property management company to handle your tenant screening and property repairs.

Of course, many buy and hold investors lose money here…..they pay too much for property management and they have no cash flow. Once again, this is where I recommend as a san antonio real estate investor buying properties in cash and owner financing them.