San Antonio investment property – Page 6

April 10, 2016April 10, 2016

What Is the Buy and Hold Real Estate Strategy?

Many real estate investors in San Antonio and elsewhere in the US debate whether they should do buy and hold property or flip property. Personally, I believe in flipping properties to build capital, and then doing buy and hold real estate investing for the long term.

To put it succinctly, the buy and hold real estate strategy is the concept of buying under market value real estate investments, fixing them up enough to get them rented or resold without overdoing it, and holding the San Antonio wholesale property for the long term and collecting the cash flow.

I generally prefer buy and hold real estate over flipping property for a long term strategy. The reason for this is that buying and holding real estate is a truly passive activity if you do it right. If you get the right tenants or owner finance buyers in the property, the wholesale property will pay you month after month and you will not have to do much to it.

On the other hand, flipping property involves constant work on rehabs and if you get caught in a downturn, many investors end up losing money, and have a property where they owe more than the property is worth.

If you are going to do buy and hold investing with San Antonio investment property, here are some quick tips to get the best cash flow:

Find the right under market value property: You want to make sure that you are buying a San Antonio wholesale property that is under market value by at least 20%, in my opinion. Where many buy and hold investors lose out is by buying a property that is too expensive and the cash flow is non existent or even negative if repairs crop up. You will always end up losing money if pay too much at the closing table.
Be sure the numbers on that wholesale property make sense: Cash flow is king in this strategy. You want to be certain that you will be cash flow positive after you pay all expenses each month, accounting for repairs and vacancies. On my rental properties in San Antonio, I put aside $100 per month on my $75,000 houses to make sure I have enough to pay for repairs. On my owner finance houses, the buyer maintains it and I just collect the cash flow. On my houses that are worth 75-100k rehabbed, I am making at least 1% of their value in rent, usually a bit more than that. So even with a mortgage, I would be making $300 or so in cash flow per month. I actually buy mine cash though.
Screen buyers and tenants with care. You have to be certain that you take your time when you screen your tenants and buyers. I am very careful who gets into my houses. I check their employment, work history, bank statements, pay stubs, credit history and criminal record. My section 8 tenants have to be totally vetted for them to get in. And my owner finance buyers rarely have to be foreclosed upon because they have long term steady jobs.

I own many long term buy and hold properties, and I always pay under market value, never over rehab them, and I always end up with positive cash flow.

If you are thinking about investing in buy and hold real estate and have limited capital, say, $100,000 or so, one great strategy is to buy two buy and hold properties in San Antonio with 20% down conventional financing, do the repairs and then rent them out section 8.

After the house has been occupied for a year or so, you can do a cash out refi and get up to 80% of the current value, which on a 100k asset could be about 80k. Then take that money and do another rental property. I have a large portfolio of buy and hold San Antonio properties myself, and I can show you how to build a 20 house or more portfolio that produces great cash flow. And then, if you want after 5 years, you can package up that portfolio of turnkey rental properties and sell them to a cash investor in California.

That is a great way to generate long term cash flow in rental property. Below is a property perfect for this strategy.

Address: 2229 W Hermosa Dr. San Antonio, TX 78201
Year Built: 1948
Description: Under market value property sale in hot north of downtown neighborhood, 2 beds 1 bath, 769 sqft, built: 1948, lot size: .14 acres yearly taxes: $1,200.00, estimated yearly insurance: $800.00, estimated repairs on this distressed sale.
Rehab Option#1: 35K, includes new HVAC, converting to 3 BR, updated kitchen, flooring, paint in/out, exterior skirt, roof, room addition, appliances, paint out door storage exterior, trash, lawn maintenance.
Max After Repair Value: $139,000.00 with owner financing, comps are for 3/1.
Rehab Option #2: 15k with Owner Finance ONLY – AC, flooring paint in and out $109,000 ARV.
Cash Price: $69,900 firm.

April 5, 2016May 29, 2021

Why Investors Who Obsess About Interest Rates and ROI Lose Money

Obviously it is important in San Antonio real estate investing to make a good return on your investment dollar. In my 15 years of investing in San Antonio investment property, I have averaged about $8000 profit on flips on under market value properties, and approximately 12% ROI on San Antonio buy and hold deals.

However, if you as an out of state property investor obsess too much on ROI, how much you will make on that flip, or the interest rate that you are paying on your borrowed capital, it can talk you out of doing profitable deals, and that is a big mistake.

In the last month, I have seen investors talk themselves out of doing profitable deals – I am talking about clearing $10,000 on a flip in particular. This under market value San Antonio property is a good example:

- Address: 2229 W Hermosa Dr. San Antonio, TX 78201
- Year Built: 1948
- Description: Under market value property sale in hot north of downtown neighborhood, 2 beds 1 bath, 769 sqft, built: 1948, lot size: .14 acres yearly taxes: $1,200.00, estimated yearly insurance: $800.00, estimated repairs on this distressed sale.
- Rehab Option#1: 35K, includes new HVAC, converting to 3 BR, updated kitchen, flooring, paint in/out, exterior skirt, roof, room addition, appliances, paint out door storage exterior, trash, lawn maintenance.
- Max After Repair Value: $139,000.00 on this fixer upper with owner financing, comps are for 3/1.
- Rehab Option #2: 15k with Owner Finance ONLY – AC, flooring paint in and out $109,000 ARV.
- Cash Price: $69,900 firm.

On this San Antonio flip deal, the investor will make in the area of $10,000 on a flip, or maybe $6000 or $7000 if they have to borrow hard money. Now some people think that is too little to bother with. Oh my goodness! They are so wrong. When I first started in San Antonio real estate investing, I did 50 houses in my first year.

We’ve had investors borrow millions from private investors and they split the profits 50/50 when each project was completed. Now I only ended up making $3000 or $5000 per flip when I sold them. But I didn’t worry about such a ‘small’ amount of profit, because I made – get this – $100,000 in my first year in San Antonio wholesale property investing! And I re-invested 80% of that profit.

Let me be clear: Investors who laugh off making $5000 or $10,000 on a San Antonio flip are being foolish. True, if you only do 1 flip a year, you are not going to be able to build capital very quickly. So, you need to do at least 4 per year, or ideally, 10 or more. Then you take that $5000 or $10,000 per deal and invest it again into San Antonio flips or San Antonio buy and holds.

I have dealt with well-meaning but short-sighted investors who actually were going to scuttle $10,000 profit flip deals because they were going to possibly have to borrow 14% rate hard money. Of course it is smart to borrow the cheapest capital that you can – ideally private money or a line of credit on a piece of property you own.

Failing that, hard money is often the only option. While it is true that you will pay high interest and fees – possibly up to $4000 per deal – why on earth would you nix doing deals if you still stand to profit? Which is better, making $6000 or making zero? I know what I’ll go with!

At the end of the day in San Antonio real estate investing, focus on your total profit, not on the interest rate and fees you are paying. If you are making $5000 on a flip, I’d be happy with it and do 10 more this year.

Update: This week we had a buyer walk away from a deal that would have made her $8000 or so because she refuses to use hard money. So, rather than make $8000, she makes nothing.

April 2, 2016September 15, 2016

SOLD – 2315 W Poplar St., San Antonio, TX 78207

Forbes Says San Antonio TX Is #3 Best Place to Invest for 2016!

Interested in building a cashflowing, affordable rental portfolio? This under market value property is a great start! We are a full service wholesale property investment firm that will guide you to build a long term portfolio of rental properties.

We recommend that cash investors do two or three of these San Antonio investment properties, rent them out section 8, and then pull cash out and do more. Contact us now.

Address: 2315 W Poplar St., San Antonio, TX 78207
Description: Excellent San Antonio investment property, booming San Antonio Market, very popular location west of downtown San Antonio, voted one of the best places to invest in Forbes Magazine, 3 beds, 2 bath, 1,200 sqft, lot size: .09 acres, estimated repairs: 35K, paint in/out, new HVAC, plumbing/electrical up to code, flooring, update kitchen/bath, new sewer line connections.
Price: $42,000 CASH; ARV: 99K, see attached comps and photos

You have 3 exit strategy options:

FLIP: Retail sale of this San Antonio investment property w/35k in repairs: ARV: 99K with FHA, VA, Conventional financing. $10,000 profit is bottom line.
BUY AND HOLD: Owner Finance w/35K in repairs: 5k down, $995 monthly P/I, 30 year amortization, 10% interest, Price: 99K
BUY AND HOLD: Rent: $995 monthly with 35K in repairs.

Notes: If you owner finance this San Antonio wholesale property, you will earn ~13-14% ROI, with no maintenance.

For More Information or to Make Offer: Please contact us.

Comps: Sold Comps 2315 Poplar St Rental Comps 2315 Poplar St

March 30, 2016March 31, 2016

The Most Important Thing I Tell New San Antonio Investors Is…

I talk to many new San Antonio real estate investors every week, and I am talking to more than ever this past month. San Antonio TX is now on the radar for a lot of out of state property investors.

There are many new San Antonio wholesale property investors coming into the market every month. The reason is that San Antonio is booming.

Real estate prices are up but still affordable. The population is growing, unemployment is low, and wages continue to rise. Houses are selling quickly in the hot parts of town as well.

And while the prices are higher than two years ago, it still is very possible to make positive cash flow on under market value San Antonio properties.

If there is anything I would tell the new San Antonio real estate investor it would be this:

Don’t be greedy, and have realistic expectations!

I often talk to investors from out of state who are used to investing in more expensive areas, and earning $25,000 on a flip. Or I’ll talk to a Midwestern investor who thinks he can make 20% on a buy and hold here.

I’ve been working as a real estate investor in San Antonio real estate since 2001, and I have made many millions of dollars by making $7000 on a flip and $12% per year on a $650 per month buy and hold.

I am very happy to make those types of returns. I basically do lots of these small San Antonio investment property deals each year. Each flip makes me $7000 or $10,000, or each buy and hold makes me 11% or 12% per year, and I am fine with that.

Too many investors focus on doing a few grand slam deals each year. What they should be doing in San Antonio real estate investing is making a solid return on dozens of deals each year!

If you want to make $25,000 or $50,000 on a flip, you need to move into big projects, ones that go for $200,000 or more. And that my friends gets a lot more complicated and expensive than my little $50,000 or $60,000 San Antonio wholesale property deals.

It’s also more risky. In 2008 when the market tanked, I got stuck with a bunch of $1 million San Antonio real estate investments that were no longer worth what I paid for them. That’s what can happen when you are trying to flip expensive homes at or near market value.

Buying little under market value San Antonio houses such as mine is a lot safer. You just have to be happy making $10,000 on a flip.

I currently have several good $10,000 San Antonio flips available, and these are excellent returns that you can make a lot of money on. You should not pass on a deal because you will not make $30,000 on a flip. I advise doing at least 4 per year and making 40-50k. Then use that cash to buy San Antonio buy and hold property.

Below is an excellent 10k San Antonio flip property you should consider:

Address: 820 South San Manuel St., San Antonio TX
Year Built: 1950
Description: Under market value investment property, three bedroom, one bath that has 928 square feet. Beautiful home with TWO exterior storage units – this is a MAJOR selling point for the end buyer; most buyers are blue collar contractors, and they need their tools to be completely secure.
Max After Repair Value: $99,000.
Cash Price: $69,000.
Exit Strategy: Owner finance this out of state investment property with positive cash flow with only $10,000 in repairs completed in 30 days – $900 per month, $5000 down, 30 year note, 10% interest. This San Antonio investment property offers passive cash flow with no maintenance.
Alternative Exit Strategy: $15,000 in repairs and flip/resell retail – maximum ARV is $99,000. Profit $10,000.

March 26, 2016May 29, 2021

5 Things You Need to Make Money With Me in San Antonio Real Estate Investments

I am an aggressive investor and built myself a large portfolio of buy and hold properties in San Antonio in about five years of nonstop work. I don’t need more houses myself. Now my goal is to build long term San Antonio real estate investing relationships with like-minded, aggressive investors with capital. I want to help YOU build your portfolio.

I talk to hundreds of investors and potential investors each year. What I have learned is that the successful San Antonio real estate investors that I work with long term have several things in common.

Am I right to work with you? Are you right to work with me? Well, read below, and then decide :).

For us to work successfully together you must have:

Capital – Pretty important! You need to have at least ~$30,000 to do a San Antonio property flip, or ~$75,000 to do a San Antonio buy and hold. It also helps if you have a solid job and good credit so you can borrow cheap money. But it is not a deal breaker if you don’t have either.
Realistic expectations: Current market conditions in San Antonio affordable homes dictate that you can make $10,000 to $12,000 on a flip, and 10-14% per year on a buy and hold. Those are GREAT returns! You can do a ton of damage with those numbers and make fantastic money – do 3, 4, 10, 50 deals per year or whatever your cash situation allows.

Let me be clear: I have made millions in San Antonio real estate investing, and retired before age 30, with those types of returns. If you expect $25,000 flip profits or 20% buy and hold profits on these affordable houses, it will NOT happen in our current real estate market.

San Antonio is a great, low cost market with solid returns. The economy is strong, unemployment low, population growth is booming. Also, this area doesn’t really do crazy boom/bust like oil rich/poor Houston; it’s quite stable.

It IS a hot market right now, but it won’t go too high or ever go too low. It also is not Austin, which is a great place, but really overpriced right now. I like San Antonio because it is cheap and relatively stable, and cash flow is possible in all economic cycles.

That said, 25k flip and 20% ROI isn’t happening in my San Antonio houses in March 2016. The prices have gone up too much for that.

Patience: We work in real estate, not Burger King. You cannot ‘order’ a house to sell in a week. It sells when it sells. Typical DOM is 60-80 days. It can sell faster, but I cannot guarantee that. If you want to sell quick, I recommend buying San Antonio real estate investments north of downtown. That is a very hot area (78201 zip code especially). We also can do a ‘fire sale’ and sell the house at a lower price to get it sold quickly. If you want to get a house producing cash flow fast, I recommend doing a Section 8 rental property; we can rent it out in 30 days in many cases.
Courage: Real estate investing in San Antonio and anywhere is not for the meek who cannot handle uncertainty. You WILL make money on these under market value investment properties, but selling a house takes time.

On a related note, you need to have the guts to make a decision yay or nay on deals I send you in 24 hours. Decide! Don’t be a wimp. Millions of people say they want to get into San Antonio real estate investing or in other cities. Few ever do because they lack courage. I talk to investors who have been mulling investing in real estate for 10 years! 10 years and never bought a deal! I did FIFTY HOUSES in my first year! Run the numbers and DECIDE.

More patience: You also need patience on the rehab. 30-45 days is typical, and it can take longer if difficulties crop up, or if it rains for 10 days. I don’t want investors calling me daily on when the rehab will be done. The answer is always ASAP, but it takes time.
Trust: My comps and ARVs are dead on. I have done hundreds of rehabs, and I know how to do these little houses right. I know exactly what I am doing and what houses in my areas resell for. You of course should do your due diligence on the property and you of course can ask me questions about its resale value.

I just ask you to keep in mind that I do 100 houses in these neighborhoods per year, and I have a high degree of expertise when it comes to affordable home values in San Antonio TX. Just because Zillow says a house was worth $60,000 (pre-rehab) a few months ago does not make it true for today for the same house that has been rehabbed.

Also, note that when you look at wholesale property comps, they may not always tell the whole story. In my neighborhoods, there is a wide spread of homes values: There are junk house fixer uppers worth $30,000, and fixed up, totally rehabbed investment properties or owner occupied properties for $150,000. That can skew the comps and ‘trick’ the layman on the ARV of the investment property in question. I know the neighborhoods after 15 years and hundreds of deals, so I’m very confident of my stated ARVs.

A related note on trust: I’m not here to sell you 1 house. I’m here to sell you 10, 20, 100 houses. Would I really BS you on the ARV on a house? Heck no. You will be a one and done investor. I have no interest in that. I want long term investors here to fulfill my Mission. And it’s a lot tougher to do 50 single deals with 50 different investors than 50 with 1 investor!

You can and will make money in San Antonio real estate investing, but the above items are non-negotiable in any out of state investment property investors that work with me.

I have fired investors in the last year who did a deal with me and had unreasonable expectations. I want all potential San Antonio investors to understand each point above before they consider working with me.

So to summarize, to work with me you need:

Capital: 30k-75k
Realistic expectations: 10-12k flip, 12-14% ROI buy and hold
Courage
Patience
Ability to trust me.

So does it sound like we can work together? If so, please contact me now.

March 14, 2016March 19, 2016

Should I Flip This Wholesale Property or Buy and Hold It?

I currently own in cash several dozen buy and hold San Antonio investment properties. While I do believe that long term buy and hold investing with owner financing or renting is the best way to build real estate cash flow, there also is a place for flipping properties.

When I first began in San Antonio wholesale property in 2001-2, I only had about $70,000 cash. That was enough to buy a couple of under market value San Antonio properties. After that I didn’t have any more capital.

So what I did next was place an ad in the local San Antonio newspaper and I found an under market value property investor who loaned me $2 million over the next two years. Our strategy was to fix and flip, and we split the profits on each deal 50/50.

But Should You Do a San Antonio Flip Property or Buy and Hold?

I believe there is room in San Antonio real estate investing to do both. Below is one of my wholesale properties that will work well as a flip or a buy and hold:

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: 35K, 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: $129,000.00
Cash Price: $69,900 firm.
Exit Strategy: Owner Finance with 35K repairs: 5-10k down or more, $1,295.00 monthly P/I, 30 year amortization, 10% interest. Or 15K rehab, new HVAC, paint in/out, kitchen/bath repairs, plumbing/electric up to code, then FSBO at 109K, 10% interest, $1,100 monthly PI/TI, 30 year amortization.
Alternate Exit Strategy: Flip with $35k in repairs for a ~$25,000 profit. Rehab completed in 45 days or less.

If you buy and hold this San Antonio turnkey property, you will make 13% ROI per year on a total cash outlay of $105,000. You also could buy this property with 20% conventional finance, and pay a mortgage of approximately $500-600 per month. Positive cash flow would be $950 to $1000 if you buy cash, and about $500 per month with the mortgage. Getting financing with a property such as this in San Antonio is pretty easy if you have decent credit and assets.

OR, you could flip this house for a $20-25k profit. Your profit margin will depend upon if you use hard money to do the project. I prefer doing my flips in all cash as you will save $3-4k in fees and interest payments.

It can take longer to resell the flip retail than it can take to owner finance it or rent it with a buy and hold investment. So that is something to remember.

Of course, some houses work better as buy and hold investments and some are better as flips. It depends on the size of the home, location, number of bedrooms and more when you buy as a San Antonio real estate investor.

Overall, the strategy I tell most investors with limited capital is to do 3-4 flips, and then take the capital and do a buy and hold investment with owner financing. That way you are combining the best of both worlds with your out of state investment property investing.

March 13, 2016March 19, 2016

Case Study 1622 Alametos 78201

This distressed property sale was completed in August 2015 by my San Antonio real estate investor. The market in San Antonio TX has changed greatly in the last year. The market is booming and prices are up across the board, even in fixer upper homes.

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 investor bought this San Antonio wholesale property cash, and we completed $10,000 in repairs in 3 weeks:

$65,000 cash price
$1500 carpet removal and adding wood vinyl in 3 bedrooms
$3500 HVAC
$750 for third bedroom conversion.
$750 for dumpster – clean out
$1500 two tone interior paint
$500 update five light fixtures
$1500 level front bedroom
$1500 closing costs

Total Investment: $76,500

Repairs were complete on July 31, 2015 and property was put on MLS. By Aug. 3, we had two full owner finance, price offers as follows:

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

Investor’s total monthly income after taxes/insurance is $825.

Final ROI: 12.9%

Interested in earning 12-13% ROI with no property management expenses in San Antonio real estate investing? Contact us now.

After Rehab Additional Pictures:

March 3, 2016March 3, 2016

How You Can Use Hard Money to Make a $20,000 Flip in 60 Days

I am a long time cash buyer and wholesaler of San Antonio investment property. But not every investor can or wants to use all cash for their under market value property purchases.

That is why I have developed a good network of hard money lenders in Texas and California who can help my out of state investment property investors do San Antonio investment deals.

A ‘hard money lender’ is a private lender who loans capital to investors usually for flips, but sometimes for short term buy and hold investments.

Most hard money lenders lend based upon the value of the under market value investment property. It is an asset-based loan. If you have good credit and cash reserves, you may be able to qualify for a better rate.

Whatever your rate, be prepared to pay a high amount of interests, usually 12-15%. Why would you pay such a high rate? Because no traditional lender will lend on under market value properties that have not been rehabbed. Using hard money, while expensive, is a good option for some investors who either lack capital, or want to reserve their capital for other projects.

Hard money lenders will lend anywhere from 65-75% of the after repair value or ARV of the property (pending the lender’s appraisal). That means that you will need to have approximately 25% to 35% of the property price, PLUS the cost of the rehab, in cash.

So, let’s look at a new San Antonio investment property deal I just got:

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: 35K, 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: $129,000.00
Cash Price: $69,900 firm.
Exit Strategy: Owner Finance with 35K repairs: 5-10k down or more, $1,295.00 monthly P/I, 30 year amortization, 10% interest. Or 15K rehab, new HVAC, paint in/out, kitchen/bath repairs, plumbing/electric up to code, then FSBO at 109K, 10% interest, $1,100 monthly PI/TI, 30 year amortization. OR, flip with $35k in rehab for a 20-25k profit in 60-90 days.

On this deal, let’s assume the hard money lender will lend 75% of the ARV. That is $52,425. So, you will need to have $17,500 of the sales prices in cash up front, plus the rehab of $35,000. So you will need $52,500 cash to do this deal.

Assuming a 13% interest rate, your payment per month during rehab/resale will be $568.

Assuming 3 months to rehab and resell, you will pay interest only payments totaling $1704. Up front fees will be approximately $2500 on this deal. So, your money is going to cost you approximately $4200.

Still, even if you incur those hard money loan costs, you stand to make $20,000 on this flip. Not a bad investment in San Antonio wholesale property!

March 3, 2016

San Antonio Investment Property Is Still Hot in 2016

Some investors might think that the San Antonio investment property market has slowed down given the decline in oil prices. But you would be wrong!

I am a San Antonio investment property wholesaler, and I am finding that sales are still strong, and prices are rising. The volume of houses that were sold in the city increased in January, and the cost to buy a house generally has gone up.

Total residential sales increased nearly 7% in January 2016 from a year ago, with a total of 1534 houses sold.

The median price of a house in San Antonio is still low – only $186,100 from $176,700 a year ago.

Overall, San Antonio is still a seller’s market, and inventory is low with demand high. I know personally I have sold 15 under market value properties in San Antonio since the beginning of the year. Investors who used to buy San Francisco investment property love to come to San Antonio and buy a distressed wholesale property for $50,000! And overall, the consumer market is still strong, with only a 3 month supply of houses available.

San Antonio’s strong investment property market is being driving by a strong economy, growing population and low interest rates. And it helps that you can still buy a single family home here for under $200,000.

I still am able to find really good under market value deals for out of state investment property investors, especially a few miles north of downtown in the 78201 zip code. Below is a great deal that I have several San Francisco investment property buyers reviewing:

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: 35K, 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: $129,000.00
Cash Price: $69,900 firm.
Exit Strategy: Owner Finance with 35K repairs: 5-10k down or more, $1,295.00 monthly P/I, 30 year amortization, 10% interest. Or 15K rehab, new HVAC, paint in/out, kitchen/bath repairs, plumbing/electric up to code, then FSBO at 109K, 10% interest, $1,100 monthly PI/TI, 30 year amortization.
Alternate Exit Strategy: Flip with $35k in repairs for a ~$25,000 profit. Rehab completed in 45 days or less.

March 1, 2016March 1, 2016

3 Ways to Make Money in Distressed Properties

Many under market value and distressed property investors have entered the market in the last five years. After the mortgage meltdown of 2007-9, almost four million families who used to own their own home now rent. That has created a significant and growing market for rental properties.

This has created a lot of new distressed property investors, which is what I have been doing for 15 years. I invest in San Antonio investment properties and sometimes wholesale Texas properties to cash investors. As a San Antonio property wholesaler, I have done very well in the last 10 years here in up and down markets.

Since the mortgage melt down, half of all investment property purchases in the US are in distressed houses and half of them are in cash.

If you are thinking about getting involved in under market value, distressed properties to make real estate cash flow, there are several ways you can do it:

Do It Yourself

Some distressed property buyers and investors find their own fixer upper and rehab it themselves or pay a contractor to do it. You will really need to beat the bushes to find an under market value fixer upper; there is a ton of competition.

However, if you do not have any experience, I personally would not recommend buying and rehabbing the house totally on your own. There are just too many places where you can get in a lot of trouble.

One way to do it is to find a local expert with a good rehab crew and have them wholesale you a property that is under market value and has reasonable repair expenses. That company may be able to guide you on doing the rehab. I have actually done this myself in San Antonio. This father and son have bought three houses from me wholesale, and then they rehabbed it themselves with my guidance. They have managed to resell each house retail for a 15-20k profit.

Turn Key Properties

If you do not have the time or the ability or desire to rehab a house, you can buy a fully rehabbed San Antonio investment property or out of state investment property, sometimes with a tenant already in it.

If you are going to buy turnkey properties, you will want to buy in a market with affordable real estate, but cheap real estate isn’t the only criterion. Also, you want to buy in a city where jobs and population growth is increasing steadily. I am not objective, but I am a huge fan of San Antonio TX investment properties because real estate is inexpensive, the economy is strong and the population is growing.

And when the market dips, the downturn is mild in TX. So if you need to unload a property in a pinch in Texas, you probably can do it without losing your rear.

Note that some turnkey property providers will charge you a lot for the house because they have to cover their rehab costs. You won’t end up making as much money per property as if you do it yourself, but it’s less hassle, so it can be a viable alternative for some investors.

The Owner Finance Option

I have come up with my own unusual way of making money on distressed San Antonio investment properties for the last 15 years that combines a bit of both strategies above.

Doing a property yourself obviously has the risks of finding a good property on your own and getting a good price, and all of the risks of doing your own rehab. And turnkey properties are all done for you, but the price is higher and the returns lower.

In my system, I find the under market value distressed properties in San Antonio. I negotiate a good low price, and then wholesale it to the out of state property investor.

I do a limited rehab of the property for $10,000 to $20,000. After that, I usually will help the investor to owner finance it to a local family who have steady jobs. The advantage here is that the property is then maintained by the end buyer. You do not have to worry about maintaining the house from a distance.

I am a very experienced San Antonio wholesale property expert, and my investors usually make 12-15% on these distressed properties. It’s definitely something to consider, instead of doing it yourself with all the risks, or paying a higher price for a turnkey property.