Personal income growth since 2011 in Texas ranks #2 in the US, with only North Dakota ahead. Some San Antonio real estate investors think that crashing oil and natural gas prices would have slowed down the Texas economy, but the Lone Star State continues to do well. And San Antonio buy and hold properties continue to sell and rise in value.
Note: I don’t personally worry much about what the economy does in San Antonio anyway. In the 2007-9 crash, I bought and sold $2 million in real estate and still had my San Antonio buy and hold houses rented out with no problem. San Antonio affordable homes are always in demand.
Economic experts in Texas this month stated that several areas of the Texas and San Antonio economies continue to keep job growth going and wages rising. For example, health care is very strong, and San Antonio has a very strong military presence with several Air Force and Army bases.
Even with low oil prices, Texas still created 1.7 million jobs from 2010-15, which is the best in the US. In the same time frame, the entire US economy lost 400,000 jobs.
The oil and gas slow down has had some impact in Houston, but San Antonio is continuing to see low unemployment and wage growth. San Antonio is seeing economic growth in the 3-4% range.
Even though oil prices are low for the time being, research shows that oil production has only dropped marginally in Texas. There are 2.5 million barrels per day produced in this state, down from 2.8 million two years ago. The small production decrease has come even though there are only 200 or so active rigs in the state, which is down from 900 two years ago.
This means good news for San Antonio buy and hold investors, and San Antonio flip investors. I continue to buy and sell real estate investments, although the prices are up 20% from two years ago.
I recommend doing Section 8 rental property for a good San Antonio buy and hold investment, as the rental market is very strong:
Address: 804 S San Eduardo Ave, San Antonio, TX
Year Built: 1949
Description: Fixer upper, under market value 4 beds 1 bath, 816 sqft, built: 1949, lot size: .1 acres, yearly taxes: $1,200.00, estimated yearly insurance: $750,
Exit Strategies: Rent San Antonio investment property with 30K in repairs: $1,095.00 with section 8, no need to chase the monthly payment, San Antonio Housing Authority pays direct deposit to your account.
Section 8 rental property in San Antonio is a controversial topic in some quarters. Section 8 housing came to be during the Great Depression, when the federal government wanted to provide public housing for lower income people. Today, the purpose of section 8 is to offer subsidized housing to certain lower income citizens.
But is San Antonio section 8 property a good real estate investment? Generally, I say yes; I like to deal with the San Antonio Housing Authority and section 8 renters. That said, it depends on the property and a few other things. Let’s look at section 8 rental property pluses and minuses:
Pluses
Your income is stable and guaranteed each month. You receive your payment each month electronically. After a person applies and passes the background check and other screening, the section 8 voucher gives them up to 100% assistance for their rent.
Higher rent. You can reassess the rent you charge each year and increase it by up to 8%. So, if you rent your San Antonio investment property for $800 monthly, you could raise it to $1175 in five years.
Incentive to keep up the San Antonio rental property: There is an annual inspection, so if the renter trashes the house, they can lose their voucher. Note: I do serious rehab on the San Antonio fixer upper before I rent it, and pictures are taken. So if there is a lot of wear and tear, I can show the tenant did it.
Large number of possible tenants: The GoSection8.com website has thousands of prospective San Antonio renters and it is quite easy to get a house rented.
Long term rent: I find that most section 8 renters rent for many years, so you will have fewer vacancies with your San Antonio rental property.
Minuses
Government bureaucrats: You have to deal with the red tape of the Section 8 bureaucracy and this can cause some delays. However, I find that the San Antonio Housing Authority is pretty good to work with.
Slow payments: It can take longer than I like to get a renter in my San Antonio buy and hold property due to delays with the government. But, once the tenant is in, the rent comes in every 30 days on time.
Inspections: Section 8 has fairly strict inspections, but I do complete rehabs and I know what Section 8 looks for, so I do not have major problems here.
More repairs: The renter does not own the San Antonio property so it is possible that more wear can happen.
Late payments: I have had a few tenants over the years pay late, and reporting them can take some time.
Generally, I find section 8 rental property in San Antonio to be a good bet. I am able to get good renters into my investment properties by carefully screening potential renters.
Here is a good potential San Antonio section 8 rental property:
Address: 4907 Waycross Ln., San Antonio, Texas 78220-1840 Year Built: 1971 Description: Under market value fixer upper 4 beds 2 bath, 1078 sqft, lot size: .13 acres, yearly taxes: $1,200.00, estimated insurance: $750.00, estimated repairs: 30K; central hvac, flooring, update kitchen/bath, roof, interior/exterior finish. Price: $49,000 Cash ARV: 109-115K Exit Strategy:
Owner Finance with 30K repairs: 5k down, $1,095.00 monthly P/I, 30 year amortization, 10% interest, Price: 109k
Rent with 30K in repairs: $1,095.00 with section 8, no need to chase the monthly payment, San Antonio Housing Authority pays direct deposit to your account.
We think that buying San Antonio investment properties with a buy and hold strategy is the best idea for real estate investing here.
Here are the five major advantages to buying and holding real estate investments in San Antonio, in our years of experience.
Income: Most investments you purchase offer a regular return, such as an annuity, or potential for appreciation in equity (stocks), but buy and hold real estate offers both of these. The best buy and hold real estate investments offset your expenses and debt, and also produce monthly positive cash flow of 5-10% per year. Meanwhile a typical annuity pays 3-4%.
Depreciation: Flipping houses in San Antonio is great and I have done my share, but the IRS is always going to get its piece of your real estate profits with flips. With buying and holding, you can write off the value of your San Antonio wholesale property over 27.5 years. This depreciation is negative income. However, it is only negative in a paper sense because your costs of upkeeping the property come out of your cash flow. So, depreciation losses reduce or remove your positive cash flow and reduce your taxes.
Building up equity: The cash flow from your San Antonio investment property allows you to pay your mortgage without spending your own money. Each month, also, part of your loan principle is paid off. About 15-25% of every loan payment will pay off the principle of your loan and add to your equity.
Appreciation: Your real estate investments can go up in value, and of course they can go down. The good news is that with properly cash flowing real estate properties, you are making profits regardless of what is going on in the market. My San Antonio properties did drop in value by 20% in the crash, but I was able to continue receiving income from them; in some cases, I even could increase the rents in the downturn. As long as you have positive cash flow in downturns, you will be fine. I did great in the downturn five years ago with my San Antonio real estate investments. I bought and sold $2 million in real estate during the crash.
Leverage: If you put $25,000 into mutual funds, and it increases by 10%, you made $2500. If you put that same money into buy and hold real estate, you can buy a $75k property with a $60,000 mortgage loan. If it goes up 5%, you made around $3500, or a 20% or so return!! So, maybe the stock market has a better return on average but with buy and hold real estate, your returns are based upon a higher amount than your actual investment of principle.
As I said, I also flip houses, so this is not an either/or deal. But I like buying and holding affordable San Antonio properties because of the tax advantages, the passive cash flow, and the ability to scale. If I am holding 25 houses producing $500 of cash flow each, I have that each year, and as equity builds, I can refinance and buy more.
In summary, San Antonio buy and hold investing is the best ‘get rich slow’ scheme. You can over time create residual income, and also increase your equity exponentially as you pay down the principle, and also through appreciation and leverage.
If you are looking for a good under market San Antonio investment property to buy and hold, here is a nice $48k deal:
Address: 804 S San Eduardo Ave, San Antonio, TX
Year Built: 1949
Description: Fixer upper, under market value 4 beds 1 bath, 816 sqft, built: 1949, lot size: .1 acres, yearly taxes: $1,200.00, estimated yearly insurance: $750.
Estimated Repairs: 30K, roof, central hvac, windows, plumbing, electrical, kitchen/bath update, interior/exterior finish. ARV $99k.
Cash Price: $48,000
Exit Strategies: Rent San Antonio investment property with 30K in repairs: $1,095.00 with section 8, no need to chase the monthly payment, San Antonio Housing Authority pays direct deposit to your account.
With this under market value San Antonio fixer upper, you can rent it section 8 for $1100 per month, and after 6 months, you can cash out refinance approximately $70,000 and do another rental property. Your cash flow on the above deal would still be approximately $250 to $300 per month.
The San Antonio real estate market is very hot, with the median property sale averaging nearly $200,000 which is a big increase from 2012, according to recent statistics.
This heated up market has had an effect on the San Antonio real estate investing market, too. Back in 2012, I could buy many fixer uppers for $20,000 or $30,000, stick $10,000 into them, and resell with owner financing at $59,900.
Now it is more challenging for me to find cheap San Antonio fixer uppers. It is very rare that I can find an under market value San Antonio property in an acceptable neighborhood for $30,000.
That is the double edged sword of having a strong local economy: People have more money in their pockets and unemployment is low, which is great. On the other hand, San Antonio fixer uppers are more expensive than in the past.
On balance, I like the current market because working people in the city have more money and they have jobs, which is a good thing for them, their families, and the city as a whole.
I have recently been able to find under market value San Antonio properties for under $50,000, which still means that the San Antonio real estate investor can still make 12-14% ROI, which is excellent.
My favorite current strategy is to buy a fixer upper for about $45,000, do $25,000 in rehab, and then rent the property out to a section 8 renter. That way the San Antonio real estate investor does not have to chase rent, and I can usually get the house occupied and producing cash flow in 30 days.
Here is a great fixer upper to consider for this strategy:
Address: 804 Virginia Blvd, San Antonio, TX 78203
Year Built: 1900
Description: Act fast – hot market and low under market value price! Serious cash flow on this San Antonio fixer upper! San Antonio wholesale property has 3 beds 1 bath, 900 sqft, built: 1900, Lot Size: .07 acres, Yearly taxes: $1,000.00, Estimated yearly insurance $600.00,
Estimated Repairs: includes interior paint, plumbing up to code, /bath updates, Max ARV: 79K.
Cash Price: $45,000
Alternate Exit Strategy: Rent with 25K in repairs: $995.00 with section 8, no need to chase the monthly payment, San Antonio Housing Authority pays direct deposit to your account.
Exit Strategies: Rent San Antonio investment property with 30K in repairs: $1,095.00 with section 8, no need to chase the monthly payment, San Antonio Housing Authority pays direct deposit to your account.
Owner Finance with 30K repairs: 5k down, $995.00-$1,095.00 monthly P/I, 30 year amortization, 10% interest, Price: 99K-109k
Description: Act fast – hot market and low under market value price! Serious cash flow on this San Antonio fixer upper! San Antonio wholesale property has 3 beds 1 bath, 900 sqft, built: 1900, Lot Size: .07 acres, Yearly taxes: $1,000.00, Estimated yearly insurance $600.00,
Estimated Repairs: includes interior paint, plumbing up to code, /bath updates, Max ARV: 99K.
Cash Price: $45,000
Alternate Exit Strategy: Rent with 25K in repairs: $995.00 with section 8, no need to chase the monthly payment, San Antonio Housing Authority pays direct deposit to your account.
If you are an investor or possible investor in California, you probably know the answer to that question! Many of my out of state investors in California cannot believe the sky high cost of investment properties in many of the high population areas of California, such as San Francisco, Los Angeles and San Diego. Great places to live, but for positive cash flow investing? Not so much! California investment property is very expensive.
If you are thinking about buying an out of state investment property for passive income, here is a good simple guide that can help:
How to Select Your Out of State Investing Market for Passive Income
Where you are going to invest in under market value properties depends on your real estate investing goals. Are you a flipper or a buy and hold investor? If you hang around my site long, you’ll learn I retired early with buy and hold investment properties that are owner financed. I’m a big believer in buy and hold long term cash flow – that is how I financially retired at just 28 in San Antonio – one of the best cities to invest in real estate, in my humble opinion.
Anyway, a good buy and hold market for passive income might not be the best flipping market. Here in San Antonio TX, flipping has gotten tough as the economy is booming as of January 2016; it’s hard for flippers to get properties cheap enough to make a good profit. For buy and hold investing though, I still make 10-12% per year, or $500-$700 per month in positive cash flow.
I’m biased, but TX is a great place for out of state investors – the population is soaring due to job growth.
As you think about where to buy out of state investment property and under market value properties, consider:
State law: Is the state friendly to property owners? You want to invest in a state that makes it easy to evict tenants or to foreclose. State that are tenant friendly, such as CA, make it so hard to evict or foreclose, you could lose your shirt.
Price to rent: What does rent cost compared to the price to buy? In my town, it’s 16.90, while in San Francisco it’s 30.05. Whoa! No wonder so many CA investors are investing in out of state investment properties.
These are not all the factors to consider when you are buying an out of state investment property instead of California investment property, but if those three areas look favorable, you probably could do well in that market and financially retire early as I did, in one of the best cities to invest in real estate. San Antonio investment property is excellent for cash flow.
How To Find Out Of State Investment Properties and Under Market Value Properties
Now that you know which market to buy your below market value investment properties, how are you going to locate that house? Most investors I know do it two ways:
They find a good real estate agent investor who is hooked up with excellent contractors, property inspectors, title company, real estate attorneys.
They find a good turnkey property provider. The house has been totally rehabbed and usually has tenants or buyers in place.
Which of these routes you go with will depend upon your investing goals again. Some out of state property investors want to have absolutely no headaches or management worries, so they just buy turnkey properties. Other out of state investors think that method is too expensive, so they manage their own rehabs and property management.
If you decide to find your own below market value properties in your chosen market, here’s what you’re looking at:
Buying Below Market Property Yourself
Advantages
You’ll get the house at a low price
High cap rate or ROI
Disadvantages
The house will not be producing income during the rehab and the time it takes to find a renter or an owner finance buyer
Rehab costs could shoot up if you don’t have reliable partners
Harder to manage the rehab and management from a distance
Difficulty in controlling material costs
Buying Turnkey Property
Advantages
Totally rehabbed
Tenant or buyer may already be in place
No work for you
Cost of material more predictable and stable
You know the quality of work you will get
Whole investment team is in place
Disadvantages
Higher initial cost
Lower ROI or cap rate
How big a difference are we looking at between buying a run down under market value house and buying a turnkey? Let’s take a look:
Run down property: Estate sale, $30k purchase, $30k in rehab – will produce 13% ROI with owner financing or renting.
Turnkey property: $80k purchase price, no repairs, will produce 9-10% ROI with owner financing or renting.
So which will it be? Most people would say you obviously go for the better ROI with the under market value property you do yourself. But remember, you are going to have to do a heck of a lot more work – at a distance – with the fixer upper property. A turnkey property will earn lower ROI, but it a lot less stress. At the very least, you might consider a good turnkey property if you are a beginner in real estate investing. That way, you can make some good positive cash flow as you develop your own investment property team.
It all boils down to how you look at investing in real estate. Investing by definition means using something to get some type of return. You just have to decide if you want to use just your money to get a return, or use your time AND money to get a potentially higher return.
Choose wisely based upon your personal investing goals, and you will hopefully be able to be financially retired on your time table.
Personally, if I were a usual buyer of California investment property, San Francisco investment property, Los Angeles investment property or San Diego investment property, I would strongly consider buying out of state investment property. Investment property is all about real estate cash flow…..it’s something you can rely on year in and year out, unlike hoping for appreciation.
I can’t tell you how many people I run into in my under market value properties career who have good jobs and hate their lives.
That is, they make $200,000 or more per year and yet, they work 60 hours per week, sit in dull cubicles for years and years, and wish they had the time to do what they want to do.
The truth is, most of us have been conned into thinking that the ONLY way to live in America is to trade time for money.
Passive income is the way to go – with under market value properties – at least 20% below market value. Who wants to sit bored in a cubicle or office for most of their working life? It’s a form of slavery, even if you are well paid.
But a guy or gal like you…..you make $200,000 per year or more out there in California or Washington….you most likely have some capital stored up so that you can buy under market value investment properties, and STOP trading your time for money. This type of out of state investment property is perfect for you. Passive income fast.
Here is a quick plan to stop trading your time for money TODAY. I am going to assume you have some capital to work with (if you don’t, go find some private investors to borrow money from.
If you live in a high cost area, strongly consider buying an out of state investment property.
This under market value investment property is one that I have scouted out carefully in a very hot part of 78201, which is north of down town San Antonio. It is seeing a lot of young professionals moving in and property values are shooting up. There is a good chance you could get a young professional buying this under market value property from you, or a hardworking blue collar family:
Address: 2229 W Hermosa Dr. San Antonio, TX 78201
Year Built: 1948
Description: Distressed property sale, 2 beds 1 bath, 769 sqft, lot size: .14 acres yearly taxes: estimated repairs: 35K (convert to 3 BR).
Max After Repair Value: $129,000.00.
Cash Price: $69,900 firm.
Exit Strategy: Owner finance 10% interest rate, $5000 down, 30 year note, $1100 per month PITI. Plenty of positive cash flow.
10% ROI no maintenance.
Here’s how you can retire early in one of the best cities to invest in real estate – Buy under market value properties just like these with cash or with borrowed cash. I do $35,000 in rehab. Then resell the house with owner financing to a qualified buyer. Simple!
The above out of state investment property will make you $1000-1100 per month, assuming you fund the deal with cash from your $200,000 or whatever job. In time you will be able to financially retire.
That’s it. Buy, rehab, resell, and collect the cash flow. It IS that simple. Lather, rinse and repeat.
New and even experienced investors often ask me how I was able to build monthly positive cash flow of more than $40,000 per month – without starting with much capital.
There are many factors involved, but at the end of the day, my strategy is very simple for real estate cash flow:
I buy 20% under market value investment properties in San Antonio, Texas.
I perform about $25,000 in rehab in 45 days, and then resell with owner financing to earn a 10-12% ROI.
I also have a great good luck charm named Teddy, which you will learn about if you stick around long 🙂
Now these are not very expensive houses; after all, this is San Antonio TX. My typical property is $60,000 or so wholesale, which is then resold with owner financing for $100,000 or so.
Each one of my below market value properties earns me ‘only’ $400 or $700 per month in positive cash flow. Some investors – especially those on the West Coast – might snicker at such a ‘small’ return.
However, one thing I have learned over 15 years in real estate investing in under market value properties is this: I would much rather do 100 ‘small’ deals per year, than 1 or 2 ‘big’ deals.
My little, bitty 3 bedroom houses for $100,000 or less may not look like much, but when you have 50 of them owned in cash, you are talking serious, positive cash flow. And that is what allowed me to financially retire at 28.
These little houses are becoming even more valuable in San Antonio these days, given how the economy is growing. The north side of downtown, especially 78201 zip code, is appreciating very well. I love to buy fixer upper distressed properties in this area – under market value.
After I do $35,000 in rehab on this below market value property, I will resell it for the investor with owner financing. I’ve bought and sold hundreds of houses in this area, and I know that I can resell this property with owner financing for $129,000. That will generate approximately $1,000 per month in positive, long term cash flow for the investor.
It is on under market value deals just like this one that I have built a large nest egg of real estate cash flow that made me financially retire so young.
Investing in under market value properties in San Antonio, Texas has provided me with a fantastic, long term passive income. Before the real estate downturn of 2007-9, I was not a real estate agent, and I relied on several investor friendly agents to show me potential under market value distressed properties in San Antonio TX.
After the crash, many real estate agents got out of the real estate business . I discovered that finding a good, long term real estate agent was harder than before to buy below market value property.
It was in 2010 that I made a fateful decision: I became a real estate agent and investor myself, and it has been a great decision for me. It has made it easier for me to buy under market value properties in San Antonio TX.
Being a licensed Texas real estate agent can help you to build property cash flow over time. Currently I own more than 50 owner financed investment properties in San Antonio TX. On most, I am making at least 10% return, which means I have cash flow of $500 to $800 per property. Most of them I own in cash.
Whenever I buy another distressed real estate property for buy and hold, I am able to save at least $1000 on real estate commissions. If I buy 40 houses a year, that’s more than $40,000! What a deal!
If you are buying more than 1-2 below market value properties per year, I think it is a good idea to go ahead and get your real estate license. If you do absolutely nothing else with it, your real estate license will save you majorly on commissions.
On many of my deals, I as the real estate investor agent buy the under market value property, fix it, and then resell it with owner financing. I am able to save TWO real estate commissions on these deals, which in some cases saves me $5000 or more!
Advantages of Being a Texas Real Estate Investor and Real Estate Agent
A real estate investor agent can save on real estate commissions for below market value properties, as I illustrated above.
You have access to your area’s MLS and can do your own due diligence on potential investment properties. Having MLS access saves you time, and allows you to get offers in before other investors.
As a real estate agent investor, you will be able to network with other agents, who certainly know people who want to invest, or may be investors themselves. I often buy unlisted properties because of my contacts with other agents in San Antonio TX.
You can do your own BPOs or Broker Price Opinions. This is a 1-3 page report that a licensed real estate agent can do, for a payment of $50-100. This is a great way to earn extra cash flow as you are getting started in real estate investing.
You also can sell retail properties to supplement your income, which has really come in handy for me several times each year as a real estate agent investor. Nothing like earning another $20,000 per year!
Clearly, the advantages of being a real estate agent investor are many for getting texas cash flow. I believe becoming an agent is really worth it if you buy several under market value investment properties annually. I also have found that being a real estate agent investor makes it easier to work with investors looking for a good out of state investment property.
