I mostly buy and hold investment properties in San Antonio TX now, but I still flip houses for out of state property investors. Over the last 15 years, I’ve flipped several hundred houses, and I’ve made my share of mistakes.
Hopefully, you can learn from the mistakes I made years ago and make good returns on your San Antonio flip properties. The biggest thing to avoid is without question to not buy the wrong San Antonio flip property! Avoiding the bad flip deal is hugely important.
And here are some of the mistakes in more detail that will get you hosed in your San Antonio flip project:
#1 Getting Your ARV from Zillow
I run into quite a few rookie investors who think that you can get an accurate after repair value by using Zillow and other websites. Let me be clear: If you are getting your ARV from online research, just take a pile of cash and burn it, because you are going to get hosed on the San Antonio flip deal.
You MUST work with a very experienced real estate agent (who ideally is an investor) who knows the area well and can determine an accurate ARV.
I for example am a San Antonio real estate agent and also an expert San Antonio real estate investor. I know down to the dime what the ARV is on a San Antonio flip property or a San Antonio buy and hold property.
#2 Fudging the Numbers on the 70% Rule
The 70% rule works like this: Take your ARV (which I sure hope is accurate!) and multiply it times .70. So, if the ARV is $100,000, multiply that times .70. That’s $70,000. Now, subtract your repairs (another area where you really have to know what you’re doing to make a San Antonio property flip work).
Say, the repairs are $20,000. So, you subtract that from $70,000. You now know approximately the maximum amount you can pay for that San Antonio flip property.
Some rookie investors will fudge the numbers here because they fall in love with a deal. Never do that. Be ruthless and disciplined when determining the maximum amount you can pay. Your profits depend on it.
#3 You Buy the San Antonio Flip Property with No Exit Strategy
As I said above, I usually buy and hold San Antonio properties long term now – with owner financing. It is, however, a good idea to have a couple of exit strategies in mind if something goes amiss.
For example, you could rehab the San Antonio wholesale property and not find a buyer for 6 months. It has happened even to me. In that case, you need to go to plan B, which for me is to rent out the property section 8. That’s a good go-to, back up option for San Antonio distressed properties.
#4 Doing a Flip Deal with No Team
How many out of state investment property investors get into real estate investing on the side with no experienced team to rely on? What a disaster. You are almost certain to get hosed in San Antonio real estate investing.
To make a successful San Antonio flip, you need to have the following:
- An expert real estate agent/investor
- An experienced rehab crew
- Hard money lender (working with an experienced investor will be easier because he will have done a lot of deals with many HMLs in the area)
- Real estate attorney
- Title company
I have a San Antonio buy and hold and property flip team that I have worked with for 10 years.
#5 Flipping With Your Last $10,000 or $20,000
Sure you can risk it all and hit it big, but you also can get totally hosed. You should not do a San Antonio property flip with money that you absolutely have to have back in 90 days or the world will end.
For your first property flip in San Antonio, you can use a hard money lender to fund a good deal of the deal. You still will need maybe $10,000 or $20,000 of your own money. Make sure you can afford to have that money tied up for a few months! If you can’t, I’d wait to do a flip until you can.
#6 Doing the Rehab on Your Own
I usually maximize my profits on my buy and holds and flips because I know a lot about construction after 15 years. Many rookies lose their butts and get hosed on rehab. Do not do the rehab on your own unless you have YEARS of construction experience in similar projects, and you have the time to devote to the flip project.
#7 Never Doing a Deal
After all this gloom and doom about failing in flipping a house, the worst is really to never do a deal because you are afraid. You just need to do plenty of prep work and studying and networking to prepare to do your flip deal. Study the numbers, learn construction, assemble a good team, and when the time comes, do the deal!
If you are interested in doing a San Antonio property flip and are nervous, I’m happy to work with new investors with capital. I’ll show you exactly how I do it to make a $15,000 or $20,000 return in 60-80 days.