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SOLD – 2005 Ave D, Hondo TX 78861

Investors! Hondo, TX, is located 45 west of San Antonio and is experiencing rapid growth as home prices soar in the metro area. Demand rising for affordable rents near San Antonio! Easy drive to the city for workers.

Contact 210 865 0742 today if interested, or email jmpickett@gmail.com

This 800 square foot, two-bedroom, one-bath under market value property can be rented for $1000 per month with 20k in rehab, or flipped for $110,000 with 40-50k in rehab with added 3rd bedroom.

Note – Renter is ready to rent this property once it’s rehabbed.

Address: 2005 Ave D, Hondo, TX 78661

Price: $57,000 cash

Lot size: .21 acre

Recommendations: Owner finance or rent: $40,000 in repairs, including foundation and plumbing, finish interior – rent for $1000 per month. Flip: $50,000 in rehab, including adding a third bedroom, foundation and plumbing, finish out interior. Rent for $1100 to $1200 per month.

ARV: $115,000 to $120,000

Comps: 281 22nd St – 2/1 800 square feet: sold for $85,000; 2802 Ave H, 2/1 960 sq. ft. : sold for $109,000

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Why Our Investor Used Her $40,000 Windfall To Be San Antonio Rental Property

A year ago, one of our San Antonio investors had a windfall of about $40,000 that was left to her when a relative passed away. This wholesale property investor had about $27,000 of student loan debt. She wasn’t sure what to do with the money – whether she should spend it, pay off loans, or invest in San Antonio rental property.

The student loans came out to about $500 per month, so it was tempting to pay off those loans with the $40,000. She also got advice from family members to do various things with the cash – buy a car all cash, invest in CDs, fix up her home, etc.

In the end, she decided to use that $40,000 to buy her first San Antonio investment property. Many of her relatives couldn’t understand buying a home with that money, and not live in it!

Why She Didn’t Pay Off Her College Debt

There are good arguments to pay off student loan debt, without question. But this under market value property investor decided to wait on that for three reasons:

  1. College loan debt is tax deductible: This investor’s loans have an 8% interest rate, which after her tax deductions and inflation rate of 3%, the APR is around 4%.
  2. Liquidity: If she paid off her college debt with the money, she’d have no liquid cash. This would have made a tough situation if she had something bad happen, such as a roof problem on her home or needed emergency surgery.
  3. No cash flow: If she paid off her loans, that money wouldn’t be making her money. She had another investment property (rental property) that made about 30% return on an investment of $35,000.

San Antonio Rental Property Purchase

So, she bought an under market value property for us with a price of $105,000. The actual value of the home was about $137,000.

She put down $28,000 and had closing costs of $4,000. Her out of pocket costs were $32,000.

The rental property had two units – one was a 2/1 for $750 a month and the other was a 3/2 for $1,000 a month. Mortgage payment with taxes and insurance was $700. The property was in good shape and only needed $1,500 in repairs. Monthly costs were $170, including water and trash.

Monthly cash flow came $880 or so, and she kept five months of cash reserves for the mortgage payment for about $3500. Her yearly cash flow was $10,200, minus a vacancy rate of 7%, for a total of about $9800 a year.

Her ROI was $9800, divided by $32,000, for about 30% cash-on-cash return.

She was able to get enough in rental income to pay for her monthly college debt payments and still have cash flow! That’s why, if you do it right, investing in San Antonio rental property can make sense.

But you need to get the right property at the right price, with acceptable repair costs. San Antonio investment properties are increasing in value, so you need to find a good deal to maximize your cash-on-cash return. But when you find the right one, you can bet that you’ll see increased appreciation; we had about 10% appreciation on homes in San Antonio in the last year.

We will have new San Antonio investment properties on this site soon (as of May 24, 2021), so check back soon!

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House Prices Soaring In San Antonio in 2021

The spring selling season has started in San Antonio, and home buyers and investors looking for properties should expect to pay more, no matter if you’re buying a $50,000 under market value property or a $1 million mansion.

A recent study revealed the annual appreciation of homes in San Antonio is between 7-8% as of February, compared to a year ago.

Lower-priced homes in San Antonio saw an 8% rise, with a typical price of $153,000. For homes up to $226,000, the rate was 8%. Home values in more expensive homes above $366,000 grew 7.3%.

Also, the median price of sold homes in San Antonio increased 12% in March 2021 to $268,000, with the average of 45 days on the market, which is down 35% from last year.

We’re seen such an increase in prices this year that some worry we might be looking at a housing bubble like 2008. But this doesn’t seem likely; the conditions causing the increase this time are different, so we’re probably in for a steady rise for the foreseeable future.

Excess lending is largely what drove the 2006 and 2007 bubble. But lending standards are tighter now. Most buyers need higher FICO scores and down payments, and debt to income ratios are tighter.

Also, there still is a shortage of homes in San Antonio; the inventory dropped to only 1.3 months in March 2021. That’s well below the typical six month supply that is thought to be a good balance between buyers and sellers.

Another factor reducing supply – and this is something that should concern investors looking for San Antonio wholesale properties – is high material costs. Prices have tripled since 2020 with the average cost of a new San Antonio home almost $400,000.

Available land is scarce and more expensive, and the permitting process is taking longer.

More people are moving into Texas from more expensive areas, drawn to the lower real estate and living costs. Real estate investors are buying up a lot of under market value real estate properties in San Antonio, too. This increases prices.

But while you will pay more for San Antonio wholesale properties, you can charge a higher price when you owner finance or rent it.

Here at Texascashflow.com, we’re currently searching for new deals that meet our criteria. Don’t worry – we’ll have our listings updated soon with more fantastic wholesale investment properties.

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Send Us Your Best Under-Market Value San Antonio Deals! 

We currently are looking for under-market value wholesale deals in San Antonio! We have several cash investors outside the US looking for $50-100K wholesale distressed properties to repair and owner finance. Send property addresses to jmpickett@gmail.com now! Or call 210-865-0742.

Zip codes: 78228, 78207, 78212, 78223, 78210, and 78201.

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How to Buy Your First Investment Home

Real estate often produces many wealthy people, so there are many reasons to consider buying an investment home. But like any type of major investment, you are wise to understand the subject well before you put your money on the line. With the information below, you will be better prepared to buy your first investment property in San Antonio.

#1 Make Sure You Can Handle It

One of the biggest parts of owning investment property is dealing with its daily headaches, which include plenty of repairs. Do you know how to repair things? Do you enjoy using tools? If not, you can always pay others to handle your repairs, and/or give the responsibility to property managers. But you will have lower profits that way.

Many property owners with a few properties may do their own repairs, but if you do not want to spend your time on this, you may not want to be a landlord.

Many new landlords discover they do not enjoy maintaining properties, so be sure this is something you want to do before you spend a dime.

#2 Pay Down Personal Debt

Some experienced investors may have debt as part of their overall portfolio. But many experts say the novice should get into investment homes with as little debt as they can. If you have student loans, car loans and credit card debt, you may want to pay that down before you start to take on other major obligations.

#3 Have Cash Available

First of all, getting an San Antonio investment home in 2018 will usually require you to put down a larger down payment than you do with a personal residence. You often need 20% down to buy many investment properties today.

One exception is the FHA loan; if you live in the investment home yourself (such as a duplex or triplex) you can get a loan with a 3.5% down payment. But most experts advise putting more money down. Plus, you should have plenty of cash in the bank if things start to go wrong with your property. You could have a major repair needed, or you may have an apartment vacant for months.

#4 Watch Out For Higher Interest Rates

Investment properties are riskier for lenders. So the interest rate on your money will be higher. This higher rate will eat into your profits, so be prepared for this.

#5 Watch Your Margins

Wall Street companies that buy distressed homes usually shoot for 5% or 7% returns because they have a lot of overhead to pay. But you should have a profit margin goal of 10%. It is wise to estimate your maintenance costs at 1% of the value of the property each year. Other costs of owning the property will be HOA fees, insurance, property taxes and various monthly costs. Also, don’t forget to account for vacancy.

#6 Beware of Fixer Uppers

It is always tempting to buy a cheap, distressed home and try to repair and flip it into a profitable investment home. But if this is your first home, you may not want to take on a headache. Unless you are hooked up with a contractor that does good work cheap, or you comfortable making major home repairs on your own, you should probably avoid a home that needs a lot of work for your first investment.

A better idea is to look for a home that is under market value in a decent area that only needs cosmetic repair.

#7 Get a Good Location

This can be easier said than done. You need to find a home with reasonable property taxes, good schools, a neighborhood with lower crime rates and a good job market. But if you find this type of neighborhood, the homes there could be beyond your budget. This could tempt you into buying cheaper homes in bad neighborhoods. This isn’t always a failure, but it is definitely riskier. When you buy homes in worse neighborhoods, you will have more problems with crime, repairs, tenants, etc.

#8 Determine Operating Expenses

The operating expenses on your property will probably be between 35% and 80% of the total income on the property. If you are charging $1500 for rent and your expenses are $600, this is 40%. Some investors use the 50% rule. This means if you charge $2000 for rent, expect $1000 per month in expenses.

The bottom line on your first investment home is that it can be a great thing if you do your homework. But if you do not really understand what you are doing, your first investment property can end up costing you money. So be sure that you buy the right home at the right price and have determined your budget and operating expenses as realistically and accurately as possible.

 

 

 

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Why Seller Financing Often Makes Sense in San Antonio

As successful under-market value real estate investors in San Antonio, our investors own plenty of rental properties and owner finance properties. Depending upon market conditions, we may do one investment property type more often than the other, but we 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 our investors’

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 for 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.

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

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Converting Investors’ Rentals to Owner Finance Was the Best Decision Ever

Before the market crash, two of our biggest investors owned more than 100 rental properties. Like many investors, they once thought that owning rental properties was the only way to make money in real estate investing.

What they found was that they were often dealing with repair problems.  It didn’t matter that they had property managers. When you own 100 houses, you always have to deal with a repair, a late bill, a vacancy, paperwork and so on.

They also found it was hard to know what their cash flow on each house was each month. Writing checks for new water heaters and fridges gets old fast!

It was around 2009 that one of our investors’ mentors talked to them about switching to owner finance so they could retire with millions in real estate. That mentor only did owner finance homes.

Rather than being a landlord responsible for property upkeep and repairs, there are more efficient ways to generate monthly cash flow.

Be the Bank!

Think about your own house. Each month you send an electronic payment (or check) to your mortgage company or bank. Your bank doesn’t have to maintain the property – you do. Since you are buying the property from the bank on terms, it is natural to your benefit to maintain the property. The bank knows that statistically, homeowners are much more likely to keep their houses in good repair than renters. That’s what makes holding mortgage notes so attractive.

Our mentor taught our investors they could be the bank for people who do not have the credit history to qualify for a regular mortgage loan. The investor carries the loan on the distressed property for 30 years just like the bank, and the new owner of the house simply pays a mortgage payment each month that includes taxes and insurance.

The mentor said to our investors –  why should you spend $10s of thousands on rehabbing a property when you can have the end buyer do most of it? Owner finance investment property is smart.

The end buyer usually has a vested interest in maintaining their property, as they own it.

How a Typical Owner Finance Property Deal Looks:

$62,000 cash purchase, $10,000 rehab, 50 DOM, sold for $89,900 owner finance, $937 per month, 12.3% ROI.

This 3 BR 1.5 bath property investment with positive cash flow north of downtown San Antonio TX is in a heavily revitalizing area. It was bought by the investor for $62,000.

The under-market value property only needed approximately $10,000 of rehab, including new flooring, paint in and out, and minor foundation work.

The total project cost to the investor for this under-market value property was $72,000.

Within 50 days of the completion of rehab, it was sold with owner financing with the following terms:

  • $5000 down
  • $89,900 final price
  • 10% interest
  • 30 year note
  • $937/month PITI positive cash flow
  • Cap rate 12.3%

After our investors converted most of their under-market value properties to owner finance, most of of their worries about properties disappeared. The owner maintains it and the investors simply enjoy the monthly cash flow from each property into their bank accounts.

Most people don’t seem to ever consider owner financing their property investment, probably because they don’t know about it.

The keys to success in owner finance property are simple:

  • Carefully documenting the income of the potential buyer and verifying their work history
  • Follow the Dodd Frank law, which mandates that you must collect proof of their income and document their work history.
  • You can have a Texas licensed loan originator do this for you for a $750 or so fee (we have one on staff).

The bottom line on owner finance investment property is you enjoy cash flow without maintenance and the buyer enjoys buying their own home at last – a true win-win for everyone.

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How Our Investors Buy Investment Properties in Texas Below Market Value

The most important factor in our big investors’ success in buying the best San Antonio investment property is every house they buy is under market value. That is, they buy under market investment properties that need rehab.

How To Determine Market Value

One of the biggest reasons many investors we have become real estate agents is so they can determine market value of the best below market value San Antonio investment property on their own. It is never a good idea to use Zillow to determine market value of a property. Zillow is notoriously off base, especially when you are dealing with off market properties or an out of state investment property that are not in the MLS.

Also, bear carefully in mind that the value that you come up with will largely depend upon the repairs your under market value properties need. Our investors like buy properties that are at least 20% under market value. So if the house is worth $90,000 and needs $25,000 in rehab, buying the house at $115,000 is a waste of time and money. They want to buy that house for at least 20% under $90,000, or about $72,000, so they can make a good profit.

How Investors Buy Under Market Value Properties

There are several ways that our investors use to buy under market value properties in San Antonio TX, one of the best cities to invest in real estate:

  • Buying fair market sale houses: These are houses that are owned by a private person who has equity in the house and there is no bank involved. Most of these sellers are in no rush to sell, so this can be tough. But our investors have bought many under-market value properties in estate sales; that is where they find most of their deals. In many cases,  there are several children involved and they just want to be rid of the house that needs repair.
  • Buy off market properties: Given our investors’ level of success in real estate investing, they tend to find many good deals that are not in the MLS. Agents and investors in the business send our site and top investors below-market deals. Of course, you need to get experience in the business to work this way, but know that if you do become successful, good deals often find you. We currently are analyzing several below market value properties that we will post on this site soon.
  • Buy REOs under market value: These are Real Estate Owned properties, and these are houses that the banks have foreclosed on. REOs are usually in the MLS, and some of them will be repaired and some will not. Of course, REOs are tougher to find now and many of them need a lot of work. To make your offer more attractive, you may want to tell the seller you don’t need to do an inspection. Pay all cash if you can – cash is king!
  • However you buy your under-market value investment property or out-of-state investment property, do not spend too much money on the rehab. Rehabs are where many investors lose their rears. Spend too much on your rehab and you will never make any money. Our top investors own a construction company and are able to do rehabs for 50% less than most contractors on the best San Antonio investment properties.

That in short is how our investors buy below-market value properties in Texas. The big thing to remember is to stick to your guns on your numbers – if you need to buy that house 20% under market value to make money, don’t go over it. Move on to the next under-market value property deal if you have to – there are lots of them out there!

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SOLD – 1126 Grand Valley, San Antonio TX 78207

Minor fixer upper can be transformed into a money-making machine. This home is west of downtown,  close to the river walk, museums of Art, best Mexican restaurants, Pearl District, El Mercado, Ranger creek brewing and Distiller, Farmers Market, First Fridays, Fiesta, San Pedro Springs Park and so much more

1126 Grand Alley San Antonio TX 78207 1 bed 1 bath, 412 sqft, lot size: .06 of an acre.

Price: 55K cash

 Home is occupied: $550 (long term tenant)

Estimated repairs: 5K. paint, minor plumbing, minor electrical, trash removal, fence repair, rodent removal, broken window.

Exit Strategy: buy/hold/rent – and wait for appreciation.

Estimated rent: $700-$800

Rental-Comps-1126-Grand-AlleyDownload
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FOR SALE – 1004 Monterey St. San Antonio TX 78207

With some attention and gentle care this can be your money-making investment. This home is west of downtown,  close to the river walk, museums of Art, best Mexican restaurants, Pearl Distric, El Mercado, Ranger creek brewing/Distiller, Farmers Market, First Fridays, Fiesta, San Pedro Springs Park and so much more … 

1004 Monterey St. San Antonio TX 78207 1 bed 1 bath, 448 sqft, lot size: .05 of an acre.

Price: 59.5K

Estimated repairs: 1-5K. paint minor plumbing, minor electrical.

Exit Strategy: buy/hold/rent – and get ready for massive appreciation.

Estimated rent: $700-$800

See photos and comps below!

rental-comps-1004-MontereyDownload