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.

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.

 

 

 

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.

SOLD – 117 Mebane St. San Antonio TX 78223

With some attention and gentle care this can be your money-maker, under market value investment. This home is located within walking distance to the south part of the river walk, 117 Mebane St. 3 beds 1.5 baths, 812 sqft, lot size: .17 of an acre, repairs needed to owner finance 10k: stabilize foundation, plumbing/electric up to code, fresh paint kitchen/bath, patch up roof leak, repair sheetrock damage on ceiling, lawn maintenance. 

Exit Strategy:

Owner Finance with 10k in repairs, then resale at $109,000.00 $1,100.00 monthly mortgage includes PI/TI,  30 year amortization, can sell note after 1-2 years

Rent: $1000 with 10K in repairs

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.

San Antonio Real Estate Investing Random Thoughts 2018

I started investing in under market value real estate in 2001. It was a rough experience at first. With more than $40,000 of college loan debt and not much cash, I struggled to get going in real estate. First, I tried to invest in Boston, where I attended college. Of course, prices there were out of sight. I came back home to Texas, and tried Austin. Still, even back in 2001, prices in Austin were too high for a guy with only $10,000 or so to invest.

Eventually, I migrated south to San Antonio. In those early days, I was able to find undermarket value properties for $20,000 in acceptable areas where I could get decent renters. That is how I made my investing home in San Antonio.

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.

I 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 as I said, 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 my 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 I 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. I strongly encourage people to consider investing in under market value real estate here, in addition to their stock portfolio.

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, I am finding plenty of under market value, San Antonio investment properties available for my portfolio. Blue collar workers flocking to San Antonio for jobs need houses to buy with owner financing or to rent, so my 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.

I am 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.

————-

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.

How an Investor Can Make 13% ROI in Their 401 or IRA Retirement Portfolio

Many people today are worried about saving enough money for retirement. If you are going to rely on the stock market to ensure that you can live comfortably in 10, 20 or 30 years, I understand why you may be nervous. While the historical returns of the stock market may be in the 8% range, there is no doubt that some years, the return is much less. If you are planning to retire in a few years and the market dives, you may find yourself not retiring at all.

I know someone who planned to retire in 2007 and live comfortably. After the market crashed, he had to go back to work for another five years.

The good news is that you can make a reliable 10% or even 15% ROI per year if you purchase under market value real estate investments. I have made a fortune with San Antonio investment properties over the years.

A popular way to make money for retirement today is to invest in under market value real estate in San Antonio in a solo 401k or self directed IRA. These funds can grow tax deferred over time, and you can often make an excellent rate of return.

Even after you technically retire, you still can invest in under market value real estate and enjoy cash flow. It may not be tax deferred any more, but you can still enjoy positive cash flow. Meanwhile, your friends and relatives are living off their retirement savings accounts based upon the stock market, which frequently dwindle over time.

Below is a great example of what you can do with an under market value investment property with a solo 401k or self directed IRA.

new front
$65,000 cash price, $15,000 rehab, resold for $99,900 owner finance, $1041 per month, 7 DOM, 12.9% ROI.

Still, we have CA investors coming into our fine city and buying property investment homes and making 12-13% ROI annually, with no property maintenance.

This San Antonio investment property was purchased by a CA cash buyer in July 2015 at 1622 Alametos St. This house is in 78201, and is north of downtown. This region is seeing rapid growth and appreciation.

The bottom line on this property was with only $10,000 of rehab, it was sold with owner financing at $99,900 in only a week after it was rehabbed. Here are the numbers:

  • $1041 per month
  • 30 year note
  • 10% interest rate
  • $5000 down payment
  • $99,900 final price
  • $216/mo. taxes/insurance

The total return on this San Antonio investment property was 13% per year.  That money is being returned to the investor’s solo 401k account each month, and he will use that money to eventually invest in more San Antonio investment properties.

This is what you can do with investing in real estate properties from within a solo 401k or self-directed IRA. Whether you are an accredited investor or a non accredited investor, this can be a great financial move.

Now Is a Great Time for Cash Flow AND Appreciation in San Antonio

When I first started investing in San Antonio TX in under market value properties, I did not typically see a lot of appreciation on my properties. Most of the San Antonio fixer uppers I invested in saw appreciation in the range of 2-3% or maybe 5% per year maximum.

But that was more than 15 years ago since I started to invest here, having financially retired nearly 10 years ago. Today, I am seeing more possibilities to both enjoy appreciation AND cash flow on under market value fixer uppers in San Antonio.

Today, there is a general affordable housing shortage in San Antonio. It is harder for lower income renters and home buyers to find places to live. This is creating real opportunities for real estate investors in Texas. Also, we are seeing major investment into San Antonio in the downtown area. This is coming from the state and city government, and also out of state and even out of country investors.

For example, the Pearl Brewery off of 281 near downtown was a real hellhole in 2008. It was abandoned, run down and not somewhere you would either want to live or invest. However, an outside investor poured nearly a billion dollars into the Pearl Brewery complex. Today, it is the second hottest tourist attraction in San Antonio, after the downtown Riverwalk. It is full of nice hotels, chic restaurants, and bars, and is a general great hangout spot for San Antonians and tourists alike. Very expensive townhomes of $500,000 and up also are being built around the Pearl complex.

There is plenty of other development occurring in San Antonio that is leading to good appreciation and cash flow potential for affordable home investors. For example, the area north of downtown, not far from the Riverwalk, is also near the new San Pedro creek extension. The city is pouring billions of dollars into this area. Properties located in this region are believed to be poised for appreciation of 50% or more in the next three years.

I have a property at 1614 Alametos 78201 that will return the investor at least $900 per month in rent, and with a potential ARV of $199,000. That is some serious appreciation for a home that is worth $69,000 today.

We also had a property on 1622 Alametos that we sold in 2015 for $65,000. The investor put $15,000 into it, and sold it with owner financing for $99,000. Today, that home is easily worth $115,000.

So, I recommend buying certain homes in San Antonio today in areas where the city is investing money. You should see substantial appreciation and good cash flow.

Homes in Southern California See Near All-Time Price Highs

Southern California home sales dropped 5% in May 2017, yet home prices have still hit a record high in that areas.

According to recent real estate research in California, approximately 8.5% fewer homes were sold in Los Angeles County since March 2017, but home prices are still at a near-record high average of $485,000. This is almost as high as the all-time high of $500,000 in 2007.

Southern California is hardly the only part of the state where real estate prices are testing the ability of workers, families and real estate investors to afford homes. Prices in May 2017 in California hit a record high in Orange County, California, and San Diego County, California.

Also, Forbes reports that the San Francisco, California area is seeing soaring median home prices. Around San Jose, Sunnyvale, and Santa Clara, the median home price topped $1 million in the first quarter of 2017. It was just $535,000 a year ago.

Why the Rise in Home Prices in California? 

The biggest reason this is happening is not enough homes are being built in much of California’s major metro areas to meet booming demand. This is because it is harder to get building permits in much of California.

On the other hand, Texas has a very liberal policy on building new homes. Both states feature cities with high job growth; San Francisco and Oakland added 356,000 new jobs in 2016, and in Dallas, there wee 413,000 new jobs added in the same period. But in San Francisco, only 20,400 new homes were built, and there were 120,000 new ones built in Dallas.

This difference in building permit policy has had various effects. Homeowners in Calfornia are enjoying huge increased in property values, which is great for them to pull out cash and invest in real estate. But for people who want to buy, it is extremely difficult to buy in current circumstances. Many home buyers and real estate investors are priced out of the market.

In areas such as San Antonio, Texas, prices only have doubled in the last 20 years or so, but many more people can afford to buy a home for themselves or for real estate investments.

As home prices in California have soared, we have seen increasing demand for under market value real estate investments in San Antonio. Investors want to see high-ROI investment opportunities in Texas. Many affordable homes are available in San Antonio for under $60,000 wholesale. With $20,000 in rehab, the home can be rented for $800 per month. That is the type of positive cash flow that many California real estate investors want to see.