Make 15-16% ROI in San Antonio Investment Properties

The stock market is back on the way up, and could hit 20,000 in early 2017. Consumer confidence is also at a 10 year high, and many experts think that we are in line for a period of serious economic expansion.

Even though many investors are getting into the stock market, I still keep almost all of my money in under market value San Antonio investment properties. I once had a lot of cash in the stock market, and I lost 75% of it in the market crash in 2001. Since that time, I have put my money into San Antonio investment properties, and I have never regretted it.

Putting my money into real estate investments allowed me to financially retire at 28. So yes, I am a fan of buy and hold real estate!

If you buy your properties at the right price and in the right area, you can enjoy steady, long term returns of at least 10% per year. That is my goal: I want to make at least 10% per year on each buy and hold investment property. And if I can do better than that, well, that’s just gravy!

The good news for San Antonio buy and hold investors is that I am finding more properties in early 2017 that are allowing high returns in the area of 15%. That’s for two reasons:

  • I have found more under market value properties to put under contract in the $40,000 to $50,000 cash range. I have seen a bit of a dip in some prices in the homes that I buy. I don’t know if that will last, but in the last three months, I’ve seen more sub-$50k homes in my neighborhoods than I did for much of 2016.
  • I am generally recommending that my investors owner finance houses rather than rent them. The major reason is that construction costs have increased in the last two years. This is making $10,000 rehabs for rental properties cost $15,000 or more. If you owner finance the investment property, you can spend maybe $5000 on rehab, and leave the rest of the repairs to the end buyer, who usually is a blue collar Hispanic family who can handle rehab work. Saving $5000 or so in rehab costs increases your ROI.

With some of the under market value properties I have found lately in 78210, 78201 and 78207, I have seen investors hit 15-16% ROI. And that is a long term return – most people cannot count on their stock market portfolio making a steady 15% ROI!

Again, I am perfectly happy as an investor to get 10-12% ROI; that type of return allowed me to financially retire early, but these days I am seeing 15%+ returns on some homes. So give it some thought as an alternative to investing in the volatile stock market. Here is a recent San Antonio fixer upper with 15%+ returns potentially:

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  • Address: 1360 Essex St San Antonio, Texas 78210
  • Year Built: 1956
  • Description: San Antonio buy and hold investors – Another cash flow opportunity, 1360 Essex St San Antonio, Texas 78210, 3 beds 1 bath, 1002 square feet, lot size: .19 acres, subdivision: Denver Heights, 6K repairs, clean/lawn maintenance/interior paint, After Repair Value: 79K.
  • Cash Price on San Antonio Fixer Upper:  $45,000 CASH ONLY
  • Exit Strategy: Owner Finance with 6k in repairs: 5K down payment, $795.00 monthly PI/TI, 30 year amortization, 10% interest, Sales Price: $79,000.00, see attached comps.  NOTE: We recommend owner financing this investment property rather than renting; you will be able to save your cash outlays on the repairs by owner financing it rather than renting. Renting out this San Antonio investment property is possible, but at least another $10,000 of repairs will be needed. 

 

Consider Owner Financing Your San Antonio Fixer Upper to Save on Repairs

The most popular way to buy and hold properties in San Antonio is to renovate and rent them out.

I own many rental properties myself, and there is nothing wrong with doing that. But the majority of my portfolio continues to be San Antonio buy and hold properies that I owner finance.

Owner financing usually works very well in San Antonio because we have so many blue collar workers who make $3000 to $5000 per month as a family. Many of them have no credit or poor credit. But if they have a good, steady job and can prove their income, owner financing these San Antonio fixer uppers often is better than renting them out. Why?

The major reason that I find as an owner of under market value San Antonio investment properties San Antonio investment properties is that I can save thousands of dollars on renovating the property. I let the new owner of the home do most of the repairs. Most of the repairs that I do are just enough to get it sold.

For example, consider this $39,900 cash San Antonio fixer upper:

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  • Address: 127 Hopkins St. San Antonio, TX 78221
  • Year Built: 1972
  • Description:  Location Location! Very popular neighborhood with extra-large back yard south of downtown. This is a high ROI, under market value San Antonio investment property ! – 3 beds 1 bath, 850 sqft, built: 1972, Lot Size: .16 acres, Yearly taxes: $1,052.00, Estimated yearly insurance $600.00, Estimated repairs: 5K, landscape tree removal, trash removal interior/exterior. ARV: 69.9K
  • Cash Price on San Antonio Fixer Upper:  $39,900
  • Exit Strategy: Owner Finance this San Antonio investment property with 5K in clean up: 5k down, $695.00 monthly P/I, 30 year amortization, 10% interest, Price: 69.9K.

If I rented this out, I would need to probably do at least $15,000 in additional rehab work. I can do it, but it will lower my cash reserves and lower my ROI. Also, prices of San Antonio construction materials are higher these days, so I prefer to owner finance the home with limited repairs.

With an owner finance deal, I will only need to remove trash and brush, and do some minor plumbing work in the kitchen and bathroom, plus do a full cleaning. Then I will find a good buyer with a good job with poor credit, and he or she can continue to fix it up. I have found that these types of owner finance deals on affordable San Antonio properties can work out very well for the investor. What do you think?