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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, our top investors keep a lot of their money in under market value San Antonio investment properties. Many investors once put their money in the stock market and lost it in the 2001 or 2008 crashes. Generally, putting your capital into owner financed San Antonio properties or rental properties will do better over time.

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. 
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How to Save on Rehab Costs and Long Term Property Repairs

Most San Antonio real estate investors buy under market value San Antonio properties, rehab them and then rent them out.

I have several rental properties in my San Antonio investment portfolio, but I have found in the last year or two that construction costs are eating too much into my bottom line.

As the San Antonio real estate market is heating up, construction costs have gone up on some of my fixer uppers by as much as 50%! Rather than spending $10,000 to repair and rent a property, I was finding that I was spending $20,000 or more, and my net return was under 10% per year.

Because of higher construction costs, I am advocating more owner financing my San Antonio properties. Here’s how it works in a nutshell:

  • I buy the under market value San Antonio fixer upper for $50,000.
  • I do approximately $5000 in repairs on the property, which may include painting, cleaning, minor plumbing and electrical. Basically, I am doing enough repairs on the property so that I can sell it with owner financing to a blue collar worker and his family. They will be able to complete most of the remaining repairs.
  • By only doing $5000 or so in repairs on the property, I am able to save at least $10,000 in most cases in construction and rehab costs. This often will push my ROI to 14-15%.
  • Typical terms for the end buyer are 10% interest, $5000 down, no prepayment penalty, 30 year note.

The owner financing exit strategy has the added benefit of not having any ongoing repair costs, which is great for peace of mind and my bottom line.

In summary, the foundation of my buy and hold San Antonio property portfolio is properties owned in cash and owner financed to qualified buyers. It is the primary strategy I recommend to new investors who want to build passive cash flow.

Here’s a good property that will return 14-15% per year with $5000 only in rehab:

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  • Address: 224 Avondale Ave., San Antonio, TX 78223
  • Year Built: 1957
  • Description: San Antonio buy and hold investors – Happy New Year! Excellent cash flow opportunity with central AC/Heat. This is a big plus as you don’t need to spend to add it.  Has car port and tool shed. The neighborhood is in high demand, booming south San Antonio Market, 2 beds, 1 bath, 866 sqft, lot size: .16 acres, estimated repairs: 5K, clean/lawn maintenance/exterior paint. Max After Repair Value: 85K.
  • Cash Price on San Antonio Fixer Upper:  $49,900 CASH
  • Exit Strategy: Owner Finance with 5k in repairs: 5K down payment, $850.00 monthly PI/TI, 30 year amortization, 10% interest, Sales Price: 85K. NOTE: We recommend owner financing this 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. 
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15.8% Cap Rate Case Study – 1257 Saltillo St., San Antonio TX 78207

 

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This under market value property was purchased by a California cash investor in October 2016. We performed $2000 of  clean up and lawn maintenance.

The investor purchased it for $43,000, and the total investment was $45,000. He then owner financed the property for $695 per month, 10% interest, final price $69,900. It took us approximately 30 days to find a qualified buyer.

The total return on this San Antonio, under market value investment property is approximately 15.8%.

We currently recommend that most San Antonio property investors owner finance these fixer uppers, rather than rent them out. Owner financing them means that the end buyer that we find for you will finish any other needed repairs. This reduces your outlay of cash during renovations and increases your rate of return.

Below is more information about this property from the original listing:

Address: 1257 Saltillo St., San Antonio, TX 78207

Description: Investors, this is an under market value San Antonio buy and hold property for you! Only $2000 in repairs that we do for you, and then owner finance it for $695 per month!

Excellent cash flow opportunity with this San Antonio investment property, central AC/heat, 5 year old roof, booming San Antonio Market, very popular location west of downtown, 1257 Saltillo St., San Antonio, TX 78207, 2 beds, 1 bath, 960 sqft, lot size: .1 acres, estimated repairs: 2K, clean/lawn maintenance. After Repair Value: 69.9K, ,

Price: $43,000 firm – cash only

Exit Strategy:

Exit Strategy: Owner Finance with 2k in repairs: 3-5K down, $695 monthly PI/TI, 30 year amortization, 10% interest, Sales Price: 69.9K.

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Four Simple Ways to Fund Your First Real Estate Investment

Getting going in real estate investing in San Antonio doesn’t require you to have hundreds of thousands in savings. When I first started investing in San Antonio in under market value homes, I didn’t have much of my own cash. I was able to find sources of funding so that I could buy 50 houses in my first year.

Here are some of the best, simple ways to fund your first few deals with limited cash:

#1 Buy San Antonio Property with FHA Loan

If you are buying your first San Antonio investment property, consider buying one with an FHA loan and putting down 3.5%. A classic way to get started is to buy a two or four unit multifamily property and live in one of the apartments while renting out the others.

I never did this myself, but there is a certain logic in living rent free in your own property while enjoying rental income from the other units.

#2 Hard Money Loans

You can use hard money for a few months to flip a property. Or, consider using the hard money loan so that you can rehab an under market value property, and then get a conventional loan on the property and rent it out.

Hard money loans carry high interests rates of 12-15% and don’t make sense over the long term. But it works fine for a flip, or for holding for a few months until you can get a conventional loan on the property.

#3 Mortgages from Non-Bank Entities

Some people have had trouble qualifying for mortgages in recennt years, and companies such as SoFi and Lending Home online are offering more mortgages. Many loans can be closed in as little as two weeks, and some of them will fund 100% of the purchase.

#4 Asset-Based Mortgage

There are companies today that will loan you money for a mortgage on a San Antonio investment property just based upon the income that the property will produce. One of them is B2R Finance.

Because the loans are based upon the rental income that the property will make, it is a good choice if you are just starting out in San Antonio real estate investing.

 

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Start Here To Invest in San Antonio Real Estate Today!

If you found our San Antonio real estate investing website, you probably are thinking about investing in real estate. Investing in under market value San Antonio properties can help you reach financial independence, and I can help.

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A recent rehab that I did.

If you are thinking about investing in under market value properties, here is how the investing process goes:

Get Cash to Invest

  • The real estate investor, as of 2016, needs approximately $40,000 to $65,000 to invest in a first San Antonio real estate property. If you have more cash available than that, I recommend buying several properties at once so that you can build your portfolio faster.
  • The money can come from cash savings of course, or, a good second option is a line of credit on your personal residence. If you can get a 3-5% interest rate on the money, you can invest it into cash flowing real estate that earns at least 10% interest.
  • If you do not have this much cash to invest, you need to find a private source of capital that will loan you money at a reasonable rate. Or, we can help you to find investment property loans. 
  • If you borrowed the cash out of your home to invest, we will get your first property done and producing cash flow for year. Then you can pull cash out of your investment property and pay off your loan on your personal home.
  • Then you can pull the cash out of your home again and we can start the process again with another property.
  • Note – I prefer to invest in cash, but on some of our properties, you can do 20% down and get a mortgage. In that case, I look for at least $200 to $300 per month in cash flow after all expenses. I can recommend lenders for investment property financing, if you need it. 

Investing the Money

  • I mostly recommend buying and holding San Antonio  investment properties for cash flow. If you want to flip, I’m not doing many of those deals right now given the tight margins.
  • When you have capital to invest, I recommend purchasing an under market value property in the $40,000 to $65,000 wholesale range. I have properties on this site that I have scouted out personally and have judged to be in areas that will produce good cash flow for the investor.
  • You buy the property in cash, and title goes to you or your business entity.

Rehab Begins

  • I present you with a bid that lists all of the repairs that need to be completed. Right now, I usually recommend $5-10k in repairs and then owner financing the property instead of renting.
  • 50% of the repair bill is paid up front, and 50% upon completion.
  • I give you regular updates, with photos, as work is done.

Property Is Rented or Sold 

  • Once the rehab is completed, my team will work to get the home rented or sold. Homes are listed in MLS.
  • You can either rent the home out and my team will manage it for you. Or you can owner finance the home, usually with these terms – $5000 down, 10% interest, $595-$999 per month depending on property.
  • Expect an ROI after expenses of 10% or more. I am seeing 15-16% ROI on some houses as of Jan. 2017. However, have reasonable expectations on each property. I have done very well over 15 years by making 10%-12% on my San Antonio investment properties.

And that is how investing on your first property or properties in San Antonio goes! Here is a good one to get you started:

  • Address: 1319 S Hamilton St., San Antonio, TX 78207
  • Year Built: 1956
  • Description: San Antonio buy and hold investors and real estate investors  – Another Major cash flow opportunity, 30% instant equity under market value, almost cute cottage, needs minor help, booming San Antonio Market West of Downtown,  2 beds, 1 bath, 616 sqft, lot size: .05 acres, estimated repairs: 5K, clean/lawn maintenance/interior paint/front paint. Max After Repair Value: 69K
  • Cash Price on San Antonio Fixer Upper:  $42,000 CASH ONLY
  • Exit Strategy: Owner Finance with 5k in repairs: 5Kdown payment, $695.00 monthly PI/TI, 30 year amortization, 10% interest, Sales Price: 69K, see attached sold/rental comparables.
  • Sold and Rental Comps: Sold Comps 1301 S Hamiltonrental comps 1301 s hamilton
  • For more information, please contact us. 
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Case Study – Making Big Profit on a Foreclosure

Most of my San Antonio real estate investing portfolio consists of under market value distressed properties that I own in cash. I then owner finance them properties to buyers who lack the credit to buy a home with a bank loan.

This type of San Antonio buy and hold may sound risky to many investors, I can tell you that if you do your homework on your potential buyer – verify their employment, income, get at least $5000 down, do a personal interview – you can often get very good buyers who pay you for many years.

I own several San Antonio investment properties that I owner financed for $5000, $699 to $999 per month. Some of the investment properties are 2/1s, and many are 3/1s.

Whenever possible, I only do a few thousand dollars of clean up on the property, and then I sell it with owner financing to the buyer. Most of my San Antonio owner finance buyers are blue collar workers and they can fix the homes themselves.

I do not have too many problems with foreclosures on my San Antonio fixer uppers, but when I do have a foreclosure, it isn’t a major obstacle to my profits.

This year, one of the San Antonio homes in my portfolio was 126 E. Dullnig 78223. The homeowner had paid me mortgage payments for three years, but I had to foreclose on the owners when they were 60 days late.

I took the house back and spent a thousand dollars to clean it up and get the junk out. It wasn’t in bad shape at all, and I didn’t need to do much.

Then, I was able to sell it for $49,000 cash to an investor in San Antonio, and made myself a $15,000 profit. Below is more about that home:

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Address: 126 E Dullnig Ct., San Antonio, TX 78223
Year Built: 1919
Description: Major cash flow on this San Antonio fixer upper distressed property – 4 beds 1 bath, 1100 sqft, two large storage units in the back, Lot Size: .19 acres, Yearly taxes: $1,600.00, Estimated yearly insurance $700.00, Estimated repairs: 15K, includes interior paint, electrical/plumbing up to code, landscape, trash removal, kitchen/bath updates, central HVAC, flooring, 2 room conversions, foundation/roof repairs.
Max ARV: $109-$115k

Cash Price: $48,000

Exit Strategies:

  • Rent with 30K in repairs: $1150.00
  • Owner Finance San Antonio wholesale property with 20K repairs: 5k down, $995.00 monthly P/I, 30 year amortization, 10% interest, Price: 99K. Or, owner finance with quick $5k clean up, resell for $79,900.

Not every house that I get back works out that well, but I still do fine. Usually, I just clean up the San Antonio foreclosure and resell it with $5000 down again to another buyer. I have gotten some homes back three times and just keep reselling it for the same $5000 down.

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Buy in San Antonio TX Now Before Prices Double!

Since the market crash in 2007 and 2008, San Antonio real estate prices have changed a lot. We were fortunate during the crash somewhat because our prices in San Antonio did not dip nearly as much as other places.

One of the long term benefits of investing in San Antonio real estate for cash flow is that the prices are quite steady overall. This is due to the general strength of the Texas economy, low tax rates, lack of red tape and a general pro business mind set.

When the market takes a dive, you will lose value on your home like anywhere, but the prices on homes in San Antonio in 2007 and 2008 only dropped in the area of 10%.

These days, however, the San Antonio real estate market is booming and prices on San Antonio investment properties could be rising again. Many local experts think that the real estate market in San Antonio is being driven by an increase in jobs and low mortgage rates. The number of people moving to San Antonio is still very strong, and this is driving up the real estate market.

Also, oil prices have dropped in 2016, and gas is under $2 per gallon and should stay there for the forseeable future. Any time oil starts to get near $50 to $60 per barral, more Texas rigs start to frack for oil again, which also helps the local job market.

All of this to say, these days you can still buy San Antonio investment properties of mine for cash flow for under $50,000, but this may not last. With the incoming Trump administration, we also could see cuts in taxes and regulations, which could send the San Antonio real estate market even higher. So now is the time to invest in San Antonio real estate.

With the below property for $49,000, you will be able to generate 13-14% ROI.

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  • Address: 8013 FM 1518, Somerset, TX 78069
  • Year Built: 1955
  • Description: Tremendous cash flow investment opportunity in South San Antonio suburb, excellent school district and low crime rating, 3 beds 2 bath San Antonio investment property under market value, 2150 sqft, land: .16 acres, built: 1955, tax value: 84.9K, yearly taxes: $2,400.00, estimated yearly insurance: $1,000.00, Estimated Repairs:10K, ARV:79-89K
  • Cash Price on San Antonio Fixer Upper:  $49,000
  • Exit Strategy: Owner Finance with 10K in repairs: then resell with: 5K-10K down, $895 monthly PI/TI, 30 year amortization, 10 % interest, Sales Price 89K.
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So You’re Thinking About Real Estate Investing in 2017!

Now that the presidential election is over, I am seeing more new real estate investors who are thinking about getting into cashflowing real estate properties in San Antonio.

Many of these potential investors have good jobs and good incomes, and have so far saved and invested their money mostly in the stock market. But they are nervous about investing in real estate.

I think investing in the stock market is ok in a limited fashion. I was heavily invested in the market back in 2000, and I lost a large chunk of it in the crash after 9/11/01.

That experience taught me something important: Having one’s life savings in the stock market is risky, even if you are well diversified. Since I lost so much money in the stock market at that time, I decided to invest in something solid – specifically, San Antonio under market value properties.

I strongly believe that investing in certain under market value San Antonio fixer uppers is an excellent long term wealth building strategy. My real estate strategy is usually to buy a San Antonio under market value property for $35,000 to $75,000 cash, do $5000 or $10,000 in repairs, and either rent or owner finance it.

Here is a great case study example; this property belongs to a California investor of mine:

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The house above in on West Poplar Ave. in 78207 in San Antonio. It is a newly completed San Antonio investment property that was bought the the California investor for $44,000 in October 2015.

We conducted $10,000 of rehab on the property and put it on the market in December 2015. Total cost to investor was $54,000. It was resold in late January 2016 with the following terms:

  • $83,000 sales price
  • $5000 down
  • $627.61 per month ($800 per month PITI)
  • 9% interest
  • 30 year note

Note that this is a seller finance property, not a rental property.

That property is generating $627 per month in cash flow on a $54,000 investment with no other expenses.

But what if you don’t want to do all cash deals? That’s ok too. You can use your available cash to put a down payment on a property and to do repairs, and then either rent it out or owner finance it (this is called a wrap around mortgage).

In such a case, you should be able to net at least $250 to $350 per month in positive cash flow if you hold a mortgage on the San Antonio investment property.

Here is a current property that I have carefully scouted out that can generate 12-14% ROI after the repairs are done:

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  • Address: 8013 FM 1518, Somerset, TX 78069
  • Year Built: 1955
  • Description: Tremendous cash flow investment opportunity in South San Antonio suburb, excellent school district and low crime rating, 3 beds 2 bath San Antonio investment property under market value, 2150 sqft, land: .16 acres, built: 1955, tax value: 84.9K, yearly taxes: $2,400.00, estimated yearly insurance: $1,000.00, Estimated Repairs:10K, ARV:79-89K
  • Cash Price on San Antonio Fixer Upper:  $49,000
  • Exit Strategy: Owner Finance with 10K in repairs: then resell with: 5K-10K down, $895 monthly PI/TI, 30 year amortization, 10 % interest, Sales Price 89K.

I recommend that a new San Antonio real estate investor work with an expert investor and real estate agent who has a large portfolio of properties. He or she can help you to get a good deal such as the above.

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San Antonio Is An Overvalued Real Estate Market – So What?

Years after the bottoming out of the housing market in Texas, which was in 2012, Texas generally and San Antonio specifically  is one of the to be one of the most overvalued markets in the US, according to Forbes Magazine. But I don’t think this is a bad thing.

Since prices hit rock bottom in San Antonio in January 2012, the San Antonio economy has grown strongly, with gross metro product hitting 9% in San Antonio since the end of 2014. While Austin’s gross metro product is higher at 18%, so are real estate prices. Prices in Austin rose from the end of 2012 until the end of 2015 by 41%, with a median home price of $278,000.

In San Antonio, prices rose just 21% in the same period for a median price of $190,400 as of mid 2016.

Some people would say that an overvalued housing market is not a good thing, but I think it is worth keeping a few things in mind:

  • San Antonio homes are still very affordable, with a median price currently in the $200,000 range. Got that? You can still buy a house here for $200,000 or less!
  • San Antonio under market value fixer uppers are still available for $50,000 or less, and I have seen prices drop recently, actually.
  • Even with higher prices in the last two years, I have many San Antonio fixer uppers that can return 12% or higher returns when all costs are factored in.
  • An overvalued real estate market indicates strong demand and limited supply, which indicates good economic growth. For a real estate investor, strong ecnoomic growth  is a good thing, as you have plenty of renters and buyers to occupy your real estate investment properties.

I can understand where an overvalued real estate market such as San Francisco could be a big problem, as it will price everyone but the super rich out of the market.

But here in San Antonio, prices for my San Antonio real estate investments are still very low, and we have a very low unemployment rate. The strong growth of our area and Texas generally means that many companies are moving in here, such as Maruchan (of instant noodle fame), Chevron, Rackspace and Geekdom among others.

Want to see a good example of a cheap San Antonio fixer? Here you are –

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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.
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What Will Donald Trump Mean for San Antonio Real Estate Investing in 2017?

As a real estate investor in San Antonio, I am well aware over the years of how much uncertainty a presidential election can have on the financial markets generally, and real estate specifically.

Now that Donald Trump has been elected president of the United States, many investors in San Antonio are wondering if his election will be good, bad, or somewhere in the middle for San Antonio investment properties.

Well, I can only speak for myself when it comes to the national economy and the real estate investing market, but I think that much of the ‘economic recovery’ in the last eight years has left behind a lot of the investing class and many middle class Americans.

Many of us believe that the Federal Reserve’s monetary policies have led to many in the middle class feeling inflation, little wage growth and while unemployment is low, many Americans are underworked and are making due with part time jobs to make ends meet.

I think that with Trump in charge, who obviously is a highly experienced real estate investor himself, we are likely to see more economic expansion with infrastructure investments. He also may use debt to encourage growth and will try to lower taxes for the middle class and higher earners, who provide much of the financing for job growth.

It also seems possible that he will reduce regulations in Dodd Frank and make it easier for small investors to borrow money.

Hopefully, a Trump administration will encourage stronger economic growth and greater confidence in the real estate investing markets than we have seen since 2009.

I do know that we have seen a slight drop in San Antonio real estate investment prices in the last six months, prior to Trump being elected.

I do think that with the lower real estate property prices, this is a good time to move into buy and hold real estate investing in San Antonio. Prices are lower, interest rates are still low, and the unemployment rate in San Antonio is very low. There is a strong rental and buyer market here for sure.

Here is a great under market value fixer upper that will be a great addition to your real estate investing portfolio:

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  • Address: 8013 FM 1518, Somerset, TX 78069
  • Year Built: 1955
  • Description: Tremendous cash flow investment opportunity in South San Antonio suburb, excellent school district and low crime rating, 3 beds 2 bath San Antonio investment property under market value, 2150 sqft, land: .16 acres, built: 1955, tax value: 84.9K, yearly taxes: $2,400.00, estimated yearly insurance: $1,000.00, Estimated Repairs:10K, ARV:79-89K
  • Cash Price on San Antonio Fixer Upper:  $49,000
  • Exit Strategy: Owner Finance with 10K in repairs: then resell with: 5K-10K down, $895 monthly PI/TI, 30 year amortization, 10 % interest, Sales Price 89K.