Personal income growth since 2011 in Texas ranks #2 in the US, with only North Dakota ahead. Some San Antonio real estate investors think that crashing oil and natural gas prices would have slowed down the Texas economy, but the Lone Star State continues to do well. And San Antonio buy and hold properties continue to sell and rise in value.
Note: I don’t personally worry much about what the economy does in San Antonio anyway. In the 2007-9 crash, I bought and sold $2 million in real estate and still had my San Antonio buy and hold houses rented out with no problem. San Antonio affordable homes are always in demand.
Economic experts in Texas this month stated that several areas of the Texas and San Antonio economies continue to keep job growth going and wages rising. For example, health care is very strong, and San Antonio has a very strong military presence with several Air Force and Army bases.
Even with low oil prices, Texas still created 1.7 million jobs from 2010-15, which is the best in the US. In the same time frame, the entire US economy lost 400,000 jobs.
The oil and gas slow down has had some impact in Houston, but San Antonio is continuing to see low unemployment and wage growth. San Antonio is seeing economic growth in the 3-4% range.
Even though oil prices are low for the time being, research shows that oil production has only dropped marginally in Texas. There are 2.5 million barrels per day produced in this state, down from 2.8 million two years ago. The small production decrease has come even though there are only 200 or so active rigs in the state, which is down from 900 two years ago.
This means good news for San Antonio buy and hold investors, and San Antonio flip investors. I continue to buy and sell real estate investments, although the prices are up 20% from two years ago.
I recommend doing Section 8 rental property for a good San Antonio buy and hold investment, as the rental market is very strong:
- 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.
- 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.
If you are new real estate investor in San Antonio or anywhere else, you may be considering doing San Antonio flips to build up your cash to do more real estate deals.
As an expert San Antonio wholesale property investor for 15 years, I’ve done hundreds of rehabs and have flipped many San Antonio properties. But before I go any further, if you are new to this discussion of real estate investing:
What Is a House Flipper?
This is a type of real estate investing where you buy a property (ideally under market value) with the intention of rehabbing it to a certain degree and reselling it for a profit. The profit is gained either from an appreciation of the price due to a booming real estate market, or from the capital improvements you make.
When I flip houses in San Antonio TX, I always make sure of the following for best results:
- I buy affordable homes from $30,000 to $75,000.
- I buy them at least 20% under market value.
- I do $10,000 to $30,000 in rehab, depending upon the neighborhood. It is critical to fix a San Antonio flip property enough to sell it and get maximum ARV but not to overdo it.
- I am happy to make $8000 to $10,000 per San Antonio flip as of April 2016.
If you are researching about flipping houses you may also want to know what is the 70% rule in real estate? This is a common rule that you hear in real estate flipping. It means that you should pay 70% of the ARV of the property, minus the repairs. That is the most you can afford to pay for that under market value property.
So, if the ARV of the house is $100,000 and needs $30,000 in repairs, the 70% rule states that you should pay a maximum of about $45,000 for that property. If you overpay for the property, your chances of making much money on a flip are much less.
I do not necessarily follow this rule precisely in all cases, but yes I know the maximum I likely can pay and still make my desired profit on a flip – $8000 to $10000.
Below is a nice flip that we did with a pair of local San Antonio investors. This worked out very nicely for them. If you do not overpay for the house and do not overrehab, your profit margins in San Antonio flips can be excellent!
This under market value manufactured home is located near Canyon Lake, about 15 miles NE of San Antonio. It is a peaceful and beautiful part of our area. It was a distressed property sale that worked out well for the investor.
Our principal sold this property to a family of rehabbers in San Antonio for $50,500, who then did the $25,000 of rehab themselves:
- Kitchen: $2100
- HVAC repair: $300
- Electric Fixtures: $900
- Interior repair and paint: $4500
- Exterior Repair and Paint: $3250
- Exterior skirt: $800
- Tree trimming: $500
- Roof repair: $300
- Plumbing: $500
- New Water Heater: $2010
- Bathroom: $1000
- New floors: $2200
- Dumpster: $1000
- New Appliances: $1550
- Rotten wood removal: $895
- Deck repair and stain: $900
- New mulch: $250
- New windows: $2000
- New Mail box: $100
Their total investment cost was $75,555, with a sold price of $99,970.
After commissions and closing, they had a profit of $18,000. Investors complimented us on providing them with a profitable first deal and accurate rehab numbers.
I talk to many new San Antonio real estate investors every week, and I am talking to more than ever this past month. San Antonio TX is now on the radar for a lot of out of state property investors.
There are many new San Antonio wholesale property investors coming into the market every month. The reason is that San Antonio is booming.
Real estate prices are up but still affordable. The population is growing, unemployment is low, and wages continue to rise. Houses are selling quickly in the hot parts of town as well.
And while the prices are higher than two years ago, it still is very possible to make positive cash flow on under market value San Antonio properties.
If there is anything I would tell the new San Antonio real estate investor it would be this:
Don’t be greedy, and have realistic expectations!
I often talk to investors from out of state who are used to investing in more expensive areas, and earning $25,000 on a flip. Or I’ll talk to a Midwestern investor who thinks he can make 20% on a buy and hold here.
I’ve been working as a real estate investor in San Antonio real estate since 2001, and I have made many millions of dollars by making $7000 on a flip and $12% per year on a $650 per month buy and hold.
I am very happy to make those types of returns. I basically do lots of these small San Antonio investment property deals each year. Each flip makes me $7000 or $10,000, or each buy and hold makes me 11% or 12% per year, and I am fine with that.
Too many investors focus on doing a few grand slam deals each year. What they should be doing in San Antonio real estate investing is making a solid return on dozens of deals each year!
If you want to make $25,000 or $50,000 on a flip, you need to move into big projects, ones that go for $200,000 or more. And that my friends gets a lot more complicated and expensive than my little $50,000 or $60,000 San Antonio wholesale property deals.
It’s also more risky. In 2008 when the market tanked, I got stuck with a bunch of $1 million San Antonio real estate investments that were no longer worth what I paid for them. That’s what can happen when you are trying to flip expensive homes at or near market value.
Buying little under market value San Antonio houses such as mine is a lot safer. You just have to be happy making $10,000 on a flip.
I currently have several good $10,000 San Antonio flips available, and these are excellent returns that you can make a lot of money on. You should not pass on a deal because you will not make $30,000 on a flip. I advise doing at least 4 per year and making 40-50k. Then use that cash to buy San Antonio buy and hold property.
Below is an excellent 10k San Antonio flip property you should consider:
- 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: $69,000.
- Exit Strategy: Owner finance this out of state investment property with positive cash flow with only $10,000 in repairs completed in 30 days – $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: $15,000 in repairs and flip/resell retail – maximum ARV is $99,000. Profit $10,000.