Blog Posts – Page 5 – TexasCashFlow.com

November 15, 2016May 29, 2021

How To Financially Retire on $20,000 ‘Junk Houses’ With Minimal Repairs

Many of our top investors in San Antonio have been buying and selling under market value San Antonio properties since 2001. The majority of my portfolio are properties that are $20,000 to $40,000. When I first started out, I was able to pick up many $20,000 homes in San Antonio and surrounding areas.

For the first few years, I would repair these San Antonio fixer uppers and then rent them out. That would net me in the area of 10% per year and it was fine.

But at one point, some of our investors owned more than 100 rental properties, and all of the repairs were stressful and really started to eat into my bottom line. It was in 2007 or so when one of my mentors advised me to stop fixing up these San Antonio under market value properties and renting them out.

Now, I will usually just buy $20,000 San Antonio investment properties, and do a brief clean up for a few thousand dollars, if that, and then owner finance it to a qualified buyer.

I have learned how to qualify buyers carefully; most of them are blue collar hispanic workers who have a good job and earn $3000 a month or more. I get a $5000 down payment from them, and charge 10% interest. They usually do not have good credit, but as long as they have a steady job, most of my buyers end up paying me on time for years.

I like to deal with cheap, under market value San Antonio houses for $20,000 or so and leave most of the repair to the owner finance buyer. This may not be the most obvious source of regular cash flow; most investors think they have to rent out properties and be a landlord.

I definitely prefer to just do buy and hold real estate with these fixer uppers with owner financing. Here’s a great one for just $18,000 and it needs no repairs:

- Address: 308 Strong Ave, Ballinger TX 76821
- Year Built: 1900
- Description: Texas fixer upper cash flow king – 3 beds 1 bath, 1300 sqft, ¼ acre lot, yearly taxes: $500, yearly insurance: $500,
- Estimated Repairs: NONE – Resell AS IS.
- Cash Price: $18,000
- Exit Strategy: Owner Finance this buy and hold under market value property with ZERO repairs: 2k down, $395.00 monthly P/I, 30 year amortization, 10% interest, Price: 39k. Strong demand for affordable houses under $500 per month here.

October 27, 2016

Consider Owner Financing Your San Antonio Fixer Upper to Save on Repairs

The most popular way to buy and hold properties in San Antonio is to renovate and rent them out.

I own many rental properties myself, and there is nothing wrong with doing that. But the majority of my portfolio continues to be San Antonio buy and hold properies that I owner finance.

Owner financing usually works very well in San Antonio because we have so many blue collar workers who make $3000 to $5000 per month as a family. Many of them have no credit or poor credit. But if they have a good, steady job and can prove their income, owner financing these San Antonio fixer uppers often is better than renting them out. Why?

The major reason that I find as an owner of under market value San Antonio investment properties San Antonio investment properties is that I can save thousands of dollars on renovating the property. I let the new owner of the home do most of the repairs. Most of the repairs that I do are just enough to get it sold.

For example, consider this $39,900 cash San Antonio fixer upper:

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.

If I rented this out, I would need to probably do at least $15,000 in additional rehab work. I can do it, but it will lower my cash reserves and lower my ROI. Also, prices of San Antonio construction materials are higher these days, so I prefer to owner finance the home with limited repairs.

With an owner finance deal, I will only need to remove trash and brush, and do some minor plumbing work in the kitchen and bathroom, plus do a full cleaning. Then I will find a good buyer with a good job with poor credit, and he or she can continue to fix it up. I have found that these types of owner finance deals on affordable San Antonio properties can work out very well for the investor. What do you think?

October 20, 2016October 20, 2016

How I Own High ROI Investment Properties with Just $2000 in Repairs

One of the challenges of dealing with rental investment properties in San Antonio and other places is that they cost money to rehab and maintain.

When many San Antonio real estate investors purchase under market value properties, the normal scenario is something like the following:

Buy an under market value San Antonio fixer upper for $50,000.
Stick $25,000 into it to get it ready to rent.
Rent it out for $900 per month.

That is a perfectly acceptable way to generate cash flow with buy and hold real estate investments.

But what if you can buy the house cheaper than that, put only a few thousand into it, and get it occupied for about the same monthly payment?

That is what I do on many of my San Antonio investment properties. Take a look at this very nice, incredibly inexpensive $35,000 San Antonio fixer upper deal:

Address: 1707 Gorman, San Antonio, TX 78202

Description: Stunning large lot with positive cash flow, under market value, booming San Antonio Market, very popular location east of downtown, 2 beds, 1 bath, 654 sqft, lot size: .22 acres, estimated repairs: 2K, minor electric, clean/lawn maintenance. After Repair Value: 61K,

Price: $35,000.00 cash firm.

Exit Strategy: Owner Finance San Antonio investment property with 2k in repairs: 3-5K down, $600 monthly PI/TI, 30 year amortization, 10% interest, Price: 61K

On this investment property, I got it under contract for just $39,000 (prices in my areas have been dropping lately). And rather than rent out the property – which would require $25,000 or more of rehab, I just do $2000 to clean it up.

Then, I find an owner finance buyer interested in buying the property from me on terms of 30 years, 10% interest, $5000 down. That way, I leave most of the rehab to the end buyer, and I can enjoy a very high rate of return without doing any repairs.

Owner financing a house successfully requires me to do my homework. I need to make sure of the following:

The buyer has enough income to afford the payment and to live with the other normal life expenses.
They have a stable job for at least the last two years.
They have a $5000 down payment.

Most of these buyers have poor credit, so it is up to me to find good buyers who can pay me on time. If they don’t, we foreclose and get them out in 60 days, and get another buyer in there.

That’s the cornerstone of my San Antonio investment property portfolio – buy and hold with owner financing with limited repairs of $2000 to $5000. What do you think?

October 19, 2016

San Antonio Investment Properties Under $40,000 Again!

For the last three years, many San Antonio investment properties have been rising in price. For more than a year, it was difficult to find San Antonio fixer uppers that could be purchased for less than $50,000.

And when I was able to find that under market value fixer upper, it needed more than $25,000 of repairs. That can reduce the final ROI on a San Antonio property to a range of 10-11%. Now, I own dozens of San Antonio buy and hold properties that earn 10%, and I am very happy with that. But some investors like to see 12-15% returns on their money, and I can respect that.

Recently, as of October 2016, some areas of San Antonio continue to appreciate in value. On the north side in Stone Oak, for example, San Antonio home prices are still rising. But many of the fixer upper San Antonio properties I buy are finally falling a bit in value.

Recently I have been able to get a few fixer uppers under contract for under $40,000. Just as good, I have found some San Antonio buy and hold properties that only need $2000 or $4000 in repairs, if you do an owner finance exit strategy. This means that the ‘owner’ of the property who buys it from you on terms will fix up the property.

So you as the buy and hold investor can enjoy a return around ~14% ROI and never have to repair it. Now that is quite a nice San Antonio real estate deal! Here’s one of those properties:

Address: 1604 Montezuma St, San Antonio, TX 78207

Description: Investment in great shape new paint in/out, new floor, new water heater, updated bath/kitchen; Excellent cash flow opportunity, booming San Antonio investment properties, very popular location west of downtown, 2 beds, 1 bath, 576 sqft, large lot: .07 acres, estimated repairs: 2K, minor electric, clean/lawn maintenance. After Repair Value: 59.9K,

Price: $39,900 cash firm.

Exit Strategy San Antonio Investment Property: Owner Finance with 2k in repairs: 3-5K down, $595 monthly PI/TI, 30 year amortization, 10% interest, Price: 59.9K

August 13, 2016

Should You Do a Cash-Out Refinance To Buy Investment Property?

Many people hear about cash out refinances that are the main residence of the borrow, and I do know many people who buy San Antonio investment properties and Austin investment properties who pull money out of their home to buy more buy and hold properties.

After all, if you are able to borrow money on your personal residence at a 3% interest rate and are confidant you can invest that money in San Antonio real estate and make 10% reliably, why wouldn’t you do it?

But another cash out refinance to consider is in your investment properties. A few years ago, these types of loans were hard to find after the crash, but now there are many mortgage lenders that offer buy and hold investment property owners the chance to use equity in their investment properties.

Many real estate investors are able to drop their interest rate when they do a cash out, which improves their cash flow too.

If you are thinking about doing a cash out refinance on investment properties to buy more, please keep these thoughts in mind:

Do You Have Equity?

The more equity in your property, the better position you have when you get a new loan. Most lenders for Austin investment properties, San Antonio investment properties will loan up to 75% of the home’s appraised value. This is the maximum that has been set by Fannie Mae.

So before you opt for an investment property cash out refinance, you have to have good equity in the home. I think the best candidates for this rental property strategy are houses with 30-40% equity in them.

Non-Owner Occupied Cash Out Refi 2016 Rules

Maximum LTV is 75% for a one unit property and 70% for a 2-4 unit property.
If your buy and hold investment property was listed to sell in the last 1/2 year, the max LTV is 70%.
You also cannot do a cash out refinance on an investment property bought in the last 180 days.

Note: Cash out refinance loans on investment properties are riskier for lenders, as you are not living in the house. Expect tougher qualifications and a lot more paperwork than for your own home’s cash out refi.

Expect to need excellent credit scores and six months of cash to handle all of your mortgages.

Some lenders will not allow you to do this if you already have over four financed investment properties.

Is Cash Out Refi the Right Move for You?

If you have equity, meet all requirements of the lender, and you think a lower interest rate will help, also keep these factors in mind:

Look at how much your monthly payment will go up. Can your rental income handle it, when you consider repairs and vacancies?
Think about if you are going to buy more rental properties. Taking on more debt could affect if you will be able to get another loan.
Do the terms of the refi loan make sense for your goals? Different lenders have all kinds of different terms for refinances for under market value investment properties. If you have an ARM, you want to be sure you can handle change in payment.

August 9, 2016

How Long Should I Hold My Buy and Hold Investment Property?

Many people are interested in long term buy and hold real estate investing, but some people wonder if they should sell their properties at some point. I know many buy and hold investors in San Antonio, and once in a while, one of them will call me and tell me they want to sell. I’ve picked up some nice under market value deals on some of those calls!

In any case, how long you should hold onto your real estate investment rental properties depends on many things:

What is happening in the market
Costs to maintain the properties – vacancies, taxes, insurance
Amount of rent you receive
Interest rate on loans you have, if any
Type of property – single family, multi family, condo

There is not any assurance that your properties will appreciate in value, but if your buy and hold properties are in decent areas, you can assume that the value will at least hold in most markets, and may increase by at least 1% per year. In San Antonio, my fixer upper investment properties typically appreciate in value by 3% per year. Their REAL value, of course, is that they generate $500-$900 per month in positive cash flow ; )

Many commercial investment property firms often look at investment properties with a five year outlook. Whether they want to develop the properties or hold them for cash flow, they want to maximize ROI for their investors quickly.

Of course, as a private, single investor, you do not have to worry about all that; you can focus on what is most important for your own portfolio of rental properties. Let’s assume in 5 years that your San Antonio investment properties are worth 10% more than today and you decide to hold onto them. If in five years you gain zero appreciation, those five years you waited would mean a worse return on investment. However, your properties were still paying you each month some amount of positive cash flow, assuming you are running your properties responsibly.

Before you actually purchase Texas investment properties, you should determine what your investing goal is and stick with it, regardless of what happens in the market:

Paying for major expenses: Some investors end up selling their properties to pay for college tuition. If you need cash and the only other option is taking out student loans, you may want to sell the properties regardless of what is going on in the market.
Second income source: You do not necessarily ever need to sell your properties – I’m certainly not ever selling mine. Investment properties give me residual income and have for 15 years. Also, my properties can be depreciated for 27.5 years and that cuts my tax burden.
Maximize return ASAP: This means you are flipping investment properties. Flipping properties is more difficult in an appreciating market, as you need to find under market value properties and this can be tough. Flipping works best in a depreciating market.

July 10, 2016May 29, 2021

Why I Love Buy and Hold Real Estate Investing in San Antonio TX

I see five big advantages with buying and holding San Antonio investment property.

I Make Regular Income

Most investments offer either a regular return or appreciation. San Antonio real estate investments offer both! A really good buy and hold investment property, such as the one on Wagner St. listed below for an under market value price of $49,000, offers strong positive cash flow that offsets my expenses and any debt. It also provides me a nice monthly income.

If you read much on this website, you’ll know that many of our San Antonio investors do buy and hold investing with owner financing for long term cash flow.

Depreciation

Fixing and flipping in San Antonio is well and good, although it is harder to do in this appreciating market. I can tell because flippers call me wanting properties for .50 on the dollar! Yeah right, not in THIS market!

The great thing about buy and hold property is that the IRS lets you write off depreciation on the property over 27.5 years. This is ‘negative’ income but it’s just negative on paper, which helps my tax situation.

Equity Increase

If you have a mortgage on your San Antonio investment property, the cash flow lets you pay the mortgage without spending your own cash. And, each month, part of your principle is paid down. About 20% of each loan payment increases your equity in the property. You can then borrow some of that capital if you like to buy more investment properties.

Appreciation

Buy and hold investment properties can appreciate in value depending upon the state of the market. Most of my under market value fixer uppers in San Antonio appreciate at 3-4% per year. During the last crash, most of my properties did drop in value, but I was still able to have positive cash flow from them. I was even able to increase rents on some of them.

I am mostly a cash flow investor anyway; appreciation isn’t a big deal to me.

Leverage

If you put $20k into stocks and it increase 10% in value, you make $2000. Not bad. But if you put 20k into San Antonio investment properties, you can buy a $100k fixer upper with an 80% loan. If it goes up 5%, you made $5000 with only $20,000 invested!

Even if stocks have a higher return, it doesn’t matter because real estate returns are based on much more than the principle you invested.

If you are interested in San Antonio buy and hold investing, here is a great 15% or so ROI deal to get rolling.

San Antonio Wholesale Property Address: 1515 Wagner Ave. San Antonio, TX 78211.
Year Built: 1949
Description: Location Location! Cash Flow! Under market value, 3 beds 1 bath, 816 sqft, built: Lot Size: .14 acres, Yearly taxes: $600.00, Estimated yearly insurance $700.00, Estimated repairs: 15K, includes interior paint, electrical/plumbing up to code, landscape, trash removal, kitchen/bath updates, flooring, roof repairs.
Estimated Repairs: 15k
Cash Price: $49,000
Exit Strategy: Rent San Antonio investment property with 15K in repairs: $850-$900 per month — or Owner Finance with 15K repairs: 5k down, $900.00 monthly P/I, 30 year amortization, 10% interest, Price: 89K. 15% ROI is possible.

June 21, 2016

San Antonio Real Estate Market Continues to Rise in June 2016

According to the San Antonio Board of Realtors, monthly housing reports in our south TX city continue to show steady growth and rising values.

In May 2016, 2800 homes were sold, which is a 10% increase over May 2015. Also, May 2015/May 2014 saw a 9% increase in home sales over a year ago.

The average selling price of a house in San Antonio today is $249,000, with a median price of $209,000, which is up three percent from a year ago. The average price of San Antonio homes sold in May 2015 increased 10% from a year ago.

In April, San Antonio houses that are less than $200,000 were more than half of what was sold in the city. In May, 48% of the market involved houses that sold between $200,000 and $500,000.

San Antonio’s growth is higher than Texas’ overall, but the city is still a very affordable place to both live and invest. The average home price here of $249,000 is far less than the Texas average of $271,000.

Meanwhile, the city’s commercial development continues to grow strongly. A May 2016 report by Marcus & Millichap’s Retail Research Market Report found that the retail vacancy in San Antonio has reached an all time low. There also has been limited new retail construction, so the trend of increasing occupancy and rising rental prices will continue to have an affect on the commercial market.

The employment base of San Antonio will grow at a healthy 2.5% clip for 2016, which should contribute to the rising demand for various retail businesses from grocery stores to service companies.

In my under market value San Antonio real estate investing business, we continue to see strong growth in prices and demand for affordable homes, as well. I did manage to get this San Antonio fixer upper under contract and for sale for just $52,000, which will produce a rate of return of more than 15%:

San Antonio Wholesale Property Address: 1515 Wagner Ave. San Antonio, TX 78211.
Year Built: 1949
Description: Location Location! Cash Flow! Under market value, 3 beds 1 bath, 816 sqft, built: Lot Size: .14 acres, Yearly taxes: $600.00, Estimated yearly insurance $700.00, Estimated repairs: 15K, includes interior paint, electrical/plumbing up to code, landscape, trash removal, kitchen/bath updates, flooring, roof repairs.
Estimated Repairs: 15k
Cash Price: $52,000
Exit Strategy: Rent San Antonio investment property with 15K in repairs: $850-$900 per month — or Owner Finance with 15K repairs: 5k down, $900.00 monthly P/I, 30 year amortization, 10% interest, Price: 89K.

June 9, 2016May 29, 2021

Buy and Hold Success Story – $50k Investment – $47k Return

Back in 2013, one of our investors bought their first San Antonio investment proeprty: a $50,000 buy and hold deal a few miles north of downtown San Antonio.

This was a point in the market when we did not have to do much rehab on our San Antonio investment properties. He picked up this house for a bit under $50,000 and cleaned it up with a broom and got rid of the trash. The total investment was $50,000.

At my recommendation, he did a seller finance deal on this San Antonio fixer-upper, under market value property with the following terms:

$50,000 cash purchase
$80,000 owner finance price
Zero rehab by investor
$806 per month
14% ROI

dasdf — After rehab, completed entirely by end buyer.

The owner of the property did a fantastic job on rehabbing it, as you can see by the pictures. But that is not the end of the story on this San Antonio investment property!

More Pictures After Rehab:

In August 2016, the owner of the property decided to cash out the investor. She paid him off with the proceeds of the sale of one of HER investment properties.

She paid him a sum of approximately $75,000, which is what was left on the mortgage. So, not only did he make $25,000 on the sale of the property, he also made approximately $22,000 in payments over 2.5 years! He made a total return of $47,000 on his $50,000 investment!

Now that is a fantastic San Antonio investment property return!

May 28, 2016May 28, 2016

Why Some Investors Are Flipping in Austin and Buying and Holding in San Antonio

Forbes magazine recently had another one of its Best Real Estate Investing Cities list, and Texas did very well. Austin was listed as the #1 city to invest in, and San Antonio real estate investing came in at #3. Houston, Dallas and Ft. Worth also made the top 10 list.

Some real estate investors have been pulling out of the Austin market, however, due to the high costs of real estate there. Forbes magazine gives us a clue why: The gross metro product for that city grew 24% from 2011 until the end of 2015, but houses there appreciated by 34%.

Meanwhile, the average home price in Austin was $334,000 in 2015. So clearly real estate prices are seriously on the rise in Austin. That’s why many investors call me up and are looking for San Antonio investment properties. San Antonio real estate properties are much cheaper; you still can buy a good affordable fixer upper in San Antonio for $45k to $50k. And the average home price here is about $210,000.

Given how much cheaper houses are here, there is lots of interest in San Antonio investment properties. However, you should note that days on market is longer in San Antonio than Austin. So what some investors who are interested in flipping under market value properties are doing is doing a flip or two in Austin and then doing buy and hold in San Antonio.

As a San Antonio property wholesaler, I have flipped many properties in San Antonio TX over the years, but in this current market, we are seeing profits on our flips of $7k to $10k. And days on market can be 90 or 120 days. For that reason, I am not strongly seeking out fix and flip investors at this time. I will do them for the right property and right investor, especially if the investor has the cash to do 4-5 at once. That way, both of us can make a good profit. Also, if you are a patient investor, then a San Antonio flip can work well. Just do not expect a house to sell in 20 days like in Austin.

I think the flipping market will get better in San Antonio once the market slows down in the next year or two.

So I have some investors flipping in Austin, and once they have 100k or 200k, they buy and hold in San Antonio with one of our $50k San Antonio fixer uppers:

Address: 1723 W Ashby Pl San Antonio, TX 78201.
Year Built: 1925
Description: Under market value property, investors dream north of downtown, 3 beds 1 bath, 1000 sqft, built: 1925, lot size: .19 acres, yearly taxes: $1,700.00, estimated yearly insurance: $800.00; estimated repairs: 50k in repairs to flip, includes new HVAC, updated kitchen/bath, flooring, paint in/out, exterior skirt, appliances, plumbing/electric up to code, paint out door storage exterior, trash, lawn maintenance.
Max After Repair Value: $125,000.00
Cash Price: $65,000.
Exit Strategy: Owner Finance with 35K repairs: 5-10k down or more, ~$1295.00 monthly P/I, 30 year amortization, 10% interest.
Or 15K rehab, new HVAC, paint in/out, kitchen/bath repairs, then FSBO at 105K, 10% interest, $1095 monthly PI/TI, 30 year amortization.
Alternate Exit Strategy: Flip with $50k in repairs. $8000 to $10000 profit.

I made the vast majority of my money in San Antonio real estate investing in buy and hold over the long term. Buy and hold in San Antonio is always a good deal because affordable homes seldom rise above 75k.