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Take Over a Hard Money Loan on an Investment Property and Save Big!

Investing in San Antonio real estate can be a great way to build wealth as it was for me. One of the challenges, when you are first starting out, is finding the capital to fund your investments of course. One of the ways that some investors get started is by using hard money.

A hard money loan is a bridge loan that is used for the short term to finance a property while you are doing renovations. A hard money loan in San Antonio is often used by house flippers who want to renovate the home and then sell it retail for a profit. But another strategy that some under market value property investors use is to use the hard money loan to renovate the home. Then, once the property is fixed, get a conventional investment property loan on the home and pay off the hard money loan. The property then can be rented out and you pay the loan from the rental proceeds. If you have done the deal right, you should be able to put away some money every month as your profits and save it over time to do more deals.

Hard money of course is expensive; you can expect to pay an interest rate of 12% to 16% in many cases, and you also have to pay an up front fee and a renewal fee every six months with many lenders. Ideally, you will want to have the property renovated in six months or less so you can either sell it or get a conventional loan and hold it as a rental property.

On a related note, sometimes if you look around, you can find a real estate investor who has a hard money loan on a property but does not have or does not want to spend the cash to renovate the property. In this case, you might be able to work out a deal with the real estate investor that can really save you a lot of money.

All you would need to do with this investment property would be to take over the hard money loan from the investor. In many situations, the investor may have bought the home at a much lower price than it is for sale for today. This can be a great way to get an under market value deal on a property.

For example, we have a San Antonio investment property below where the investor has a hard money loan on the home for about $58,000. That is way below market value. Homes have appreciated in San Antonio by at least 7% in the past year overall. This home on Alametos St. is for sale for $65,000, but if you take over the hard money loan, you have saved another $7000, plus the fees of taking out a new hard money loan. Then, you only need to spend the money on the rehab. What a great way to save a bundle on an investment property! Below is more information on this under market value deal.

Potential more than 40K in profit on this investment. 1614 Alametos, San Antonio, Texas 78201. Excellent location, just north of downtown with a short distance to the river walk and the new San Pedro creek river walk extension (multi-billion dollar inner city revitalization project). Properties in this location are expected to appreciate by more than 50% in value over the next two to three years.

1614 Alametos has a large back yard with shady trees. Currently, the property is set-up as 2 bedrooms and 1 bathroom with a large patio in the back of the house. To get the maximum value out of this property and location, another bedroom and bathroom should be added. Estimated repairs: $65K with purchase price: $65K. Max After Repair Value: $199K

Note: 1622 Alametos just down the street was sold to an investor in 2015 for $65,000. With $15,000 of rehab, the property was sold for $99,000 with owner financing for a 13% ROI. Home was sold within one week.

Price: $65,000

Exit Strategy: Buy, Rehab and Hold this San Antonio investment property.

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Looking to Buy Texas Investment Property? Forbes Is High on San Antonio

Forbes magazine reported this month that Texas is one of the best real estate investment property states in the country. In fact, it called it the United States of Texas because of the various attractive real estate markets in the state that are very different from one another. While the oil business is synonymous with the Lone Star State, the article notes that oil exploration, pumping, processing and financing occur in various real estate markets in the state, and there also are other industries in some Texas cities that are more important than ‘black gold.’

Houston is a difficult market for some real estate investors right now because it is hard to know what the long term effects of flood damage are. However, the possibility for future flooding could encourage more people in Houston to rent and not buy, which could lead to more rental property demand.

Dallas has been a popular place for real estate investors but prices have been climbing 10%  per year lately. The higher prices mean more people turning to rentals, so this could be a good fit for many rental property investors. But prices are high and going higher, so some landlords could be priced out of the market.

Probably the most difficult market in Texas right now is Austin. It is a more challenging investment market right now because prices are so high. Rapid growth of the population led to a doubing of home prices in the last 10 years. The growing tourist and tech industries have really increased economic growth which is good, but prices are quite high. Investors who do buy here often find that the best path forward is to subdivide a large house into several units.

The good news for San Antonio real estate investors is this local market is one of the best in the states. Population growth has been solid but not so high to overwhelm the real estate market. Job growth is strong and tourism is more important in this city than oil. The strong military presence here leads to a strong demand for rental property. Home prices are generally in balance with incomes and rents, although home prices most recently did rise in some parts of the city by 10%. The rental property market in San Antonio is quite large, with 40% of people renting at this time.

Forbes reports the current population of San Antonio is 2.3 million, with 6% population growth over three years and 3.1% job growth rate. Home prices went up 8% from last year and the average home price is $235,000.

Most of our real estate investment properties have been in San Antonio over the years and our investors do well., Prices are higher today, but it is still possible to make at least 10% per year on your real estate investments here.

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San Antonio Home Buyers Struggle to Find Homes in Tight Market

The San Antonio housing market has gotten tighter in the last several months as prices are rising and supply of home on the market is getting tighter. For March 2018, there were 2012 homes sold in San Antonio, which was an increase of 3% over last year. The market has gotten stronger and bigger every year since 2012, and is being fueld by the strong local economy and a growing population.

The median home price for San Antonio was $215,000 in February 2018, which was a 6% increase from $202,000 a year ago. There has been a shortage of construction workers and a low supply of affordable homes for sale that have caused prices to rise. Still, prices in the area are still more affordable than many parts of the country, and San Antonio real estate investors can pick up homes in blue collar areas of the city for $70,000 or so that will produce 12% ROI, such as this one:

Excellent investment with tremendous potential. 307 Golodrina Ave., 3 beds 2 bath, 1370 sqft. Lot size: .11 acres, estimated rehab to make new and flip 50K, Max ARV: 169k, asking price: 75K.

Max ARV: $169k
Asking Price: $75,000

Exit strategy: Recommended exit strategy with 20K rehab: 5-10K down payment, sales price: 129K, $1,295.00 PI/TI 30 year amortization, 10% interest or rent $1200 monthly.

The San Antonio area’s inventory of homes on the market, which is measured by the time it takes for a house to be sold if no new homes go on the market, was 3.3 months, which is very tight. The record low was December 2017 at 3.1 months. An inventory of six months shows a balance between sellers and buyers. The last time the San Antonio market was balanced was Nov. 2012.

Interestingly, the San Antonio real estate market has continued to get stronger even as interest rates rise. The national average for a 30 yar loan fixed is around 4.5%, which is nearly 1% higher than early 2017. Still, interest rates are historically low, and the economy is strong, so people’s rising wages may be helping them to deal with the higher debt costs.

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SOLD – 301 Kendalia Ave, San Antonio Texas 78214

Cash Flow King! With love and vision this unique corner lot home has a ton of potential. 2 homes on large lot, front home has 2 beds 2baths can be converted in a 3/2, back home has 2 beds 1 bath, 301 Kendalia Ave, San Antonio Texas 78214, lot size.27 acres, MAX ARV 169K, Price: 80K, estimated rehab to transfer to rental 30-40K.

Max ARV: $169k
Asking Price: $80,000

Exit strategy: Recommended exit strategy with 30-40K rehab, rent both homes front house 1k, back house $900.

Comps: Rental Comps sold comps

More Photos

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SOLD – 307 Golodrina Ave, San Antonio TX

 

Excellent investment with tremendous potential. 307 Golodrina Ave., 3 beds 2 bath, 1370 sqft. Lot size: .11 acres, estimated rehab to make new and flip 50K, Max ARV: 169k, asking price: 75K.

Max ARV: $169k
Asking Price: $75,000

Exit strategy: Recommended exit strategy with 20K rehab: 5-10K down payment, sales price: 129K, $1,295.00 PI/TI 30 year amortization, 10% interest or rent $1200 monthly.

Comps: Rental Comps sold comps

More Photos:

 

 

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San Antonio Real Estate Investing Random Thoughts 2018

Our top investors started investing in under-market value real estate in 2001. It was a rough experience at first. Many of them had college loan debt and didn’t have enough money to buy in Austin, but they tried. Eventually several of our founding investors came to San Antonio and bought properties here for $20,000.

These days, prices are much higher, but there are still good deals out for real estate investors in 2018, if you have reasonable expectations. You will have tough sledding if you want to get a house in 78201 for .50 on the dollar. Today, I’m generally able to get houses at .70 on the dollar. The market is strong and economy is doing well. There is a lot of competition and prices are higher.

Our top investors have  found that investing in San Antonio fixer uppers has not been too risky. The demand for affordable homes here is strong, and the economy is good. The biggest thing to remember is to not pay too much for the property. But don’t expect to get a house for .50 on the dollar unless it’s in a real hell hole. It is not 2009 anymore!

Many of our recent real estate investors have come from the California and Austin markets. Those are much more expensive than San Antonio. Even with the higher prices in the $50,000 to $70,000 range in San Antonio for my houses, you still can earn a 10-12% return on buy and holds. This is a very solid return and is mostly what our investors have made over the years.

If you have $50,000 or $75,000 available, San Antonio real estate can definitely make a great return for you. We strongly encourage people to consider investing in under market value real estate here, in addition to their stock portfolio.

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Thinking of Buying Investment Property? New Tax Law Makes It Time To Buy

The Tax Cuts and Jobs Act was passed through Congress very quickly at the end of last year. The law, which affects the tax returns we file for 2018 through 2025, has several parts that may make it more profitable to be a real estate investor in San Antonio and in many areaas.

The tax law offers benefits especially for landlords who are working as LLCs. It allows these landlords to pay less tax on their income, which will lower the rate. To take full advantage of this, you must file as an LLC when you buy investment properties and start to rent them. Here is more information about this tax benefit:

  • LLCs will be able to deduct 20% of their qualified business income. This means if you are a real estate investor as an LLC, you could be able to pay taxes on only 80% of what you are earning from rents.
  • LLCs are what are known as pass through entities. This means the income that you get from the LLC will flow directly to your personal tax return. If you are in the 37% federal tax bracket and have rental property income, you will now pay 29.6% because of this new 20% rule. The tax rate was not dropped for LLCs, but the end result is lower taxes for landlords who run their business this way.

Next, you could enjoy more demand for your rental investment properties. This is because some financial experts think fewer people will buy their own homes. People who are not sure about buying may rent longer. Here are three tax changes that could increase demand for your rental properties:

  • Standard deduction was hiked: The new law doubles the standard deduction to $24,000 for married couples filing jointly and $12,000 for an individual. This means fewer people will save money through itemizing. One of the big reasons people buy homes is gone for many folks.
  • New limit on local and state property tax deductions: A homeowner can deduct their state and real estate taxes on their federal income tax return. The new tax law states the deduction is limited to $10,000. So one major cost of ownership of a home went up for some peopole.
  • Limit on mortgage interest deductions: The tax law lets homeowners write off interest on mortgages up to $750,000. This is a decrease of $250,000 from the old law. People who wanted to upgrade to homes worth more than $750,000 might now think twice. So the supply of cheaper homes could be smaller. This may cause some people to rent homes longer.

Lower demand could cause lower home prices, which can be a boon for real estate investors. If you have thought about buying market value or under market value investment property, 2018 could be a great time!

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SOLD – 318 Elks Dr. San Antonio Texas 78211

 

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.

Comps: Sold Comps 318 Elks Dr.

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SOLD – 626 Barberry St, San Antonio, Texas

Location Location, area going under major revitalization including parks, roads, and sidewalks, short drive to river walk, perfect investment property, newer home built in 2009, 626 Barberry St, 3 beds 2 bath, 904 sqft, large lot: .15 acres, estimated rehab 27.5K: foundation, flooring, paint, electrical/plumbing up to code.
Max ARV: $99,000
Asking Price: $54,000
Exit strategy: Owner finance, $5,000 down payment, $99,000 sales price, $950 monthly PI/TI, 30 year amortization, 10% interest or rent $950 monthly.
See attached sold/rental comps.
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San Antonio Housing Market Still Booming in September 2017

Home sales continue to climb in San Antonio and are staying on track for another strong, record-breaking year even though there are fewer homes available on the market.

In August, there were nearly 3,000 homes sold in San Antonio, for a 2.3% increase from 2016. The total number of homes sold for 2017 are 20,867, which is 4.3% above last year at this time. Experts believe that the market is going to break the previous record when almost 30,000 homes were sold in a year.

The median home price in San Antonio is up 3.1% in August to $218,400. This is the fourth highest median price ever in the San Antonio market. Local home prices are shooting higher as there is a shortage of construction workers and more housing demand caused by the growing population in San Antonio.

It is true that housing prices are going up in San Antonio. Still, we are finding plenty of under market value, San Antonio investment properties available for our investors’ portfolios. Blue collar workers flocking to San Antonio for jobs need houses to buy with owner financing or to rent, so our business is still doing well.

San Antonio generally is still a good place to invest in under market value, high ROI investment properties, even if prices are higher than 2010. The strong, growing population and low unemployment rate indicate that this is a growing, robust economy with little signs of slowing down.

We also are seeing more accredited and non-accredited investors with solo 401ks and self directed IRAs buying investment properties in San Antonio for their portfolios.  Below is a great under market value property that will see major appreciation in the next five years.

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Potential more than 40K in profit on this investment. 1614 Alametos, San Antonio, Texas 78201. Excellent location, just north of downtown with a short distance to the river walk and the new San Pedro creek river walk extension (multi-billion dollar inner city revitalization project).

Properties in this location are expected to appreciate by more than 50% in value over the next two to three years. 1614 Alametos has a large back yard with shady trees. Currently the property is set-up as 2 bedrooms and 1 bathroom with a large patio in the back of the house. To get the maximum value out of this property and location, another bedroom and bathroom should be added. Estimated repairs: $65K with purchase price: $69K. Max After Repair Value: $199K.

Note: 1622 Alametos just down the street was sold to an investor in 2015 for $65,000. With $15,000 of rehab, the property was sold for $99,000 with owner financing for a 13% ROI. Home was sold within one week.

Price: $69,000

Exit Strategy: Buy, Rehab and Hold this San Antonio investment property.