Why Seller Financing Often Makes Sense in San Antonio

As a successful under market value real estate investor in San Antonio, I own plenty of rental properties and owner finance properties. Depending upon market conditions, I may do one investment property type more often than the other, but I will 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 my favorite way to invest.

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 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.

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

How To Do Only $5,000 In Repairs on a San Antonio Fixer Upper

 

Finance Your Investment Properties

One of the challenges of being a real estate investor is how to do investment property repairs affordably without going over budget. If you spend too much on your investment property repairs, you can lose all profit in your deal.

I have done many San Antonio property rehabs in the last 16 years. Some of them cost $10,000, $20,000, $30,000 and more. Those were rental properties, and while I was still able to make a positive ROI on most of those deals, I prefer when I can to limit the repairs on San Antonio investment properties to $5000 or so.

How do I limit repairs on an investment property to $5000, you ask?

Simple. I do not rent the property out. Renting out the property means you have to do extensive repairs of $15,000 or more and have the property inspected by the city in most cases. Spending that much on rehabs makes it harder for me to make money. Another problem with extensive repairs on investment properties these days is construction costs have shot up in San Antonio in the last 24 months.

So, rather than renting the home, I sell the property with owner financing to a blue collar family with a job but no credit. I get $5000 down, 10% interest, and a payment ranging from $695 to $995 per month usually.

The family usually have home repair skills, so they see it as a good deal to buy a fixer upper in San Antonio and perform much of the repairs themselves.

Basically, I just spend $5000 to do inside and outside paint, minor plumbing and electrical, clean up the lawn and get rid of junk. Then I sell it with owner financing. Buy and hold with owner financing is my preferred exit strategy. It allows me to increase my ROI and not have to maintain San Antonio investment properties.

Another advantage I have is that I own a construction company, so I am able to do repairs on San Antonio investment properties very affordably.

Below is a nice under market value San Antonio investment property deal that is great for an owner finance strategy:

 

  • 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
  • For more information, please contact us.