New and looking for advice
Member since 2025 · 12 posts · 12 votes
New and looking for advice
Most Popular Reply
Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votesQuote from @Paul Maldonado:
Hello BP community,
I am hoping to dive into rental property and slowly build a portfolio that will help me retire at 55 (I'm 41 now).. I have a high W2, so also looking for the tax benefits. My current home has a quite a bit of equity so I am looking to use HELOC as down payment on a multi-unit bldg in the San Antonio area. My plan would be to buy a property once a year, maybe more, leveraging as needed and then paying those properties down.
I live in California and would love some advice on the San Antonio TX area. Neighborhoods with a good rental market, up and coming neighborhoods, neighborhoods to avoid and any/all resources in that market. Would also be great to find a mentor if anyone was out there and willing to help. Thanks!
You’re ALWAYS better off investing locally, where it’s easier to:
- Learn the market
- Network to find deals
- Network to find contractors
- Be more hands-on
- Driveby property to keep tabs on it
- Network to find a decent Property Management Company (PMC)
If you invest OOS, your biggest challenge won't be finding properties to meet your goals on paper, it’ll be successfully outsourcing all of the above.
The biggest mistake we see OOS investors making in our market, over and over again, is not fully understanding Neighborhood/Property/Tenant Classes and how they impact your probability of success!
They all run their ROI numbers assuming Class A results – when buying Class B, C & even D rentals.
Then they’re shocked when their performance expectations aren't met😞
If you choose to invest OOS, and have little to no landlord experience, we highly recommend targeting Class B Neighborhoods/Properties/Tenants. If you target Class C, you better be prepared emotionally & financially for plenty of challenges.
You can find Class B properties in the Midwest to BRRRR, but it will take more digging and YOU will need to understand how to analyze & identify them - because a lot of agents, wholesalers, PMCs, etc. will try to sell you Class C or D misrepresented as Class B:
- Many of them don't know/care what Class the properties are, so they're incompetent.
- Others know exactly what they are doing, so should be labeled as crooks!
EITHER WAY YOU LOSE!
Here's some copy & paste advice you might find useful:
Why is Property Class so important for investors to understand and apply in their investing strategies?
Because the Property Class dictates the Class of the tenant pool that the property will attract.
The Tenant Class greatly impacts rental income stability and property maintenance/damage by tenants.
Both Property Class and Tenant Class will affect what type of contractors, handymen and property management companies you should target and be willing to deal with a property.
The Property Class will also impact the maintenance & renovations you do to, “Maintain to the Neighborhood”.
Why is that important?
Well, if you buy & renovate a property in Class D area to Class A standards, what Tenant Class will actually rent it?
Or, if you put several Class D tenants in a Class A four-plex, what do you think will happen to the property?
So, if you fail to apply the correct assumptions to a property, your expectations won’t be met, and it may even be a financial disaster.
We use the following to rank Property Classes, in order of importance:
- Property Tenant Pool: closely linked to location, but not always.
- Property Location: closely linked to tenant pool, but not always.
- Property Condition & Amenities: it’s important to, “Maintain to the Neighborhood.”
Key metrics for each Property Class:
Class A Properties:
Tenant Pool: Majority of FICO scores 680+, no convictions/evictions in last 7 years.
Tenant Default: 0-5% probability of eviction or early lease termination.
Section 8: Class A rents are too high and won’t be approved.
Vacancies: 5-10%, depending on market conditions.
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Class B Properties:
Tenant Pool: Majority of FICO scores 620-680, some blemishes, no convictions/evictions in last 5 years.
Tenant Default: 5-10% probability of eviction or early lease termination.
Vacancies: 10-15%, depending on market conditions.
Cashflow vs Appreciation: Typically, 1-3 years for positive cashflow, balanced amounts of relative rent & value appreciation.
Section 8: Class B rents are usually too high for the Section 8 program.
Class C Properties:
Tenant Pool: Majority of FICO scores 560-620, many blemishes, but should have no convictions/evictions in last 3 years. Verifying recent 2-years of rental history very important! Same for 2-years of job/income stability.
Tenant Default: 10-20% probability of eviction or early lease termination.
Section 8: Class C rents usually meet program requirements, proper screening still recommended.
Vacancies: 10-20%, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Should cashflow immediately, at the lower end of relative rent & value appreciation.
Class D Properties:
Tenant Pool: Majority of FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, but should have no convictions/evictions in last 12 months. Verifying last 2-years of rental history and income/employment extremely important to find the “best of the worst”.
Tenant Default: 20-30% probability of eviction or early lease termination.
Section 8: Class D rents meet program requirements, often challenges to pass Section 8 inspection.
Vacancies: 20%+, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation.
Where did we get our FICO credit score information from?
Check out this chart:
|
FICO Score |
Pct of Population |
Default Probability |
|
800 or more |
13.00% |
1.00% |
|
750-799 |
27.00% |
1.00% |
|
700-749 |
18.00% |
4.40% |
|
650-699 |
15.00% |
8.90% |
|
600-649 |
12.00% |
15.80% |
|
550-599 |
8.00% |
22.50% |
|
500-549 |
5.00% |
28.40% |
|
Less than 499 |
2.00% |
41.00% |
Make sure you understand the Class of properties you are looking at and the corresponding results to expect.
Metro Detroit has 132 cities, the City of Detroit 183 Neighborhoods, which we’re analyzing and classifying. Check out the map on our website where we’ve made this all easy to follow.
We can also share numerous examples of properties & portfolios we’ve assisted investors with!
DM us if you’d like to discuss this logical approach in greater detail!
Horror Stories from those that did NOT Understand What they were Buying:
https://www.biggerpockets.com/forums/48/topics/1137397-baltimore-a-path-to-never-ending-pain
https://www.biggerpockets.com/forums/432/topics/1231840-sell-at-a-loss-or-rent-at-a-loss
https://www.biggerpockets.com/forums/311/topics/840134-memphis-turnkey-tenant-turnover-costs
Logical Property Management4.9453 Reviews
30 Replies
- 8moJaycee GreenePro MemberReal Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 727 votes
Quote from @Paul Maldonado:
Hello BP community,
I am hoping to dive into rental property and slowly build a portfolio that will help me retire at 55 (I'm 41 now).. I have a high W2, so also looking for the tax benefits. My current home has a quite a bit of equity so I am looking to use HELOC as down payment on a multi-unit bldg in the San Antonio area. My plan would be to buy a property once a year, maybe more, leveraging as needed and then paying those properties down.
I live in California and would love some advice on the San Antonio TX area. Neighborhoods with a good rental market, up and coming neighborhoods, neighborhoods to avoid and any/all resources in that market. Would also be great to find a mentor if anyone was out there and willing to help. Thanks!Hey Paul, welcome to the BP Forum! What type of properties most interests you, SFR, 2-4 MF, or 5+ MF? What is your price range/down payment amount? Do you have a personal connection to San Antonio? @Paul Maldonado
- Member since 2025 · 12 posts · 12 votes8mo
Quote from @Jaycee Greene:
Quote from @Paul Maldonado:
Hello BP community,
I am hoping to dive into rental property and slowly build a portfolio that will help me retire at 55 (I'm 41 now).. I have a high W2, so also looking for the tax benefits. My current home has a quite a bit of equity so I am looking to use HELOC as down payment on a multi-unit bldg in the San Antonio area. My plan would be to buy a property once a year, maybe more, leveraging as needed and then paying those properties down.
I live in California and would love some advice on the San Antonio TX area. Neighborhoods with a good rental market, up and coming neighborhoods, neighborhoods to avoid and any/all resources in that market. Would also be great to find a mentor if anyone was out there and willing to help. Thanks!Hey Paul, welcome to the BP Forum! What type of properties most interests you, SFR, 2-4 MF, or 5+ MF? What is your price range/down payment amount? Do you have a personal connection to San Antonio? @Paul Maldonado
Hi Jaycee, thanks for your response. I am looking for 2-4MF. I dont have any connections in SA. It is just where I landed when doing research. Ideally I stay under 300k and will be putting the standard 20%. I know it's important to build a team out there. I just need to get started and figured BP is a great resource to try to get connected with people.
- 8moJaycee GreenePro MemberReal Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 727 votes
Quote from @Paul Maldonado:
Quote from @Jaycee Greene:
Quote from @Paul Maldonado:
Hello BP community,
I am hoping to dive into rental property and slowly build a portfolio that will help me retire at 55 (I'm 41 now).. I have a high W2, so also looking for the tax benefits. My current home has a quite a bit of equity so I am looking to use HELOC as down payment on a multi-unit bldg in the San Antonio area. My plan would be to buy a property once a year, maybe more, leveraging as needed and then paying those properties down.
I live in California and would love some advice on the San Antonio TX area. Neighborhoods with a good rental market, up and coming neighborhoods, neighborhoods to avoid and any/all resources in that market. Would also be great to find a mentor if anyone was out there and willing to help. Thanks!Hey Paul, welcome to the BP Forum! What type of properties most interests you, SFR, 2-4 MF, or 5+ MF? What is your price range/down payment amount? Do you have a personal connection to San Antonio? @Paul Maldonado
Hi Jaycee, thanks for your response. I am looking for 2-4MF. I dont have any connections in SA. It is just where I landed when doing research. Ideally I stay under 300k and will be putting the standard 20%. I know it's important to build a team out there. I just need to get started and figured BP is a great resource to try to get connected with people.
@Paul Maldonado you may want to check with a couple of local SA folks, @Ram Gonzales and @James Winchester II. I don't know much about SA, but I thought this duplex looked interesting: 9007 Garnett Ave, San Antonio, TX 78221
- Member since 2011 · 152 posts · 113 votes8mo
As someone who has been an actively investing in rentals sine 1978 (and flipping houses since 1991 along with being a hard money lender since 2018), some things jump out at me right away from your post. I have been teaching and writing about rental property investing for many years as well, so here are my comments:
1. What have you done to educate yourself before your planned "dive?" It's important to understand the right mindset for this type of investing as well as to have your entity (if you're going to invest inside a business entity) and your team assembled before you start making offers.
2. Understand that good rental property does not always throw off losses that can be taken against W-2 income. That's because they have net income greater than the depreciation deductions in many cases, so be careful about buying a property while hoping to reduce your taxable income...it may actually have negative cash flow. However, some of the other types of tax benefits from rentals are that the income is not subject to self employment tax because it's considered passive income, and the profits from selling a property you've had for more than a year are taxed as long-term capital gains. There are even more tax benefits, but the whole "count my losses against my job income" is not always the case.
3. Using HELOC on one property for the down payment on another property is usually an excellent strategy. The real estate game runs on OPM (Other People's Money otherwise known as borrowed money).
4. I would strongly caution you about investing anywhere outside of where you live until you develop your skills. I realize CA isn't the most landlord-friendly state, but landlording is hard enough when your property is down the block from where you live let alone in another state. You DO NOT want to be an inexperienced landlord when you are trying to select a property manager either, in case you thought that would be a good solution.
- Member since 2025 · 12 posts · 12 votes8mo
Quote from @Joel Miller:
As someone who has been an actively investing in rentals sine 1978 (and flipping houses since 1991 along with being a hard money lender since 2018), some things jump out at me right away from your post. I have been teaching and writing about rental property investing for many years as well, so here are my comments:
1. What have you done to educate yourself before your planned "dive?" It's important to understand the right mindset for this type of investing as well as to have your entity (if you're going to invest inside a business entity) and your team assembled before you start making offers.
2. Understand that good rental property does not always throw off losses that can be taken against W-2 income. That's because they have net income greater than the depreciation deductions in many cases, so be careful about buying a property while hoping to reduce your taxable income...it may actually have negative cash flow. However, some of the other types of tax benefits from rentals are that the income is not subject to self employment tax because it's considered passive income, and the profits from selling a property you've had for more than a year are taxed as long-term capital gains. There are even more tax benefits, but the whole "count my losses against my job income" is not always the case.
3. Using HELOC on one property for the down payment on another property is usually an excellent strategy. The real estate game runs on OPM (Other People's Money otherwise known as borrowed money).
4. I would strongly caution you about investing anywhere outside of where you live until you develop your skills. I realize CA isn't the most landlord-friendly state, but landlording is hard enough when your property is down the block from where you live let alone in another state. You DO NOT want to be an inexperienced landlord when you are trying to select a property manager either, in case you thought that would be a good solution.
Thanks so much for your response. I do have a few years of remote landlord experience, but I sold that house and haven't done it in a few years. My local market (Los Angeles) is too expensive to invest in. I do realize it's harder out of state, but its in my budget and I need to get started somewhere.
- Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes8mo
Quote from @Joel Miller:
As someone who has been an actively investing in rentals sine 1978 (and flipping houses since 1991 along with being a hard money lender since 2018), some things jump out at me right away from your post. I have been teaching and writing about rental property investing for many years as well, so here are my comments:
1. What have you done to educate yourself before your planned "dive?" It's important to understand the right mindset for this type of investing as well as to have your entity (if you're going to invest inside a business entity) and your team assembled before you start making offers.
2. Understand that good rental property does not always throw off losses that can be taken against W-2 income. That's because they have net income greater than the depreciation deductions in many cases, so be careful about buying a property while hoping to reduce your taxable income...it may actually have negative cash flow. However, some of the other types of tax benefits from rentals are that the income is not subject to self employment tax because it's considered passive income, and the profits from selling a property you've had for more than a year are taxed as long-term capital gains. There are even more tax benefits, but the whole "count my losses against my job income" is not always the case.
3. Using HELOC on one property for the down payment on another property is usually an excellent strategy. The real estate game runs on OPM (Other People's Money otherwise known as borrowed money).
4. I would strongly caution you about investing anywhere outside of where you live until you develop your skills. I realize CA isn't the most landlord-friendly state, but landlording is hard enough when your property is down the block from where you live let alone in another state. You DO NOT want to be an inexperienced landlord when you are trying to select a property manager either, in case you thought that would be a good solution.
Great points! I'm not a fan of using a HELOC as a down payment and then another loan for the proposed rental property.
To the OP, have you flown to San Antonio and looked around yet at properties and neighborhoods?
I'm not sure if you're in the Bay Area, L.A. or San Diego, but I'd start by attending local meet ups to talk to investors who invest in your area and out of state. I've met many investors in the the Bay Area and everyone has had very different experiences. It seems like more experienced investors do better OOS than newbies. I attend meetups frequently and am still learning,
- 8moMichael SmytheBusiness MemberReal Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
Quote from @Paul Maldonado:
Hello BP community,
I am hoping to dive into rental property and slowly build a portfolio that will help me retire at 55 (I'm 41 now).. I have a high W2, so also looking for the tax benefits. My current home has a quite a bit of equity so I am looking to use HELOC as down payment on a multi-unit bldg in the San Antonio area. My plan would be to buy a property once a year, maybe more, leveraging as needed and then paying those properties down.
I live in California and would love some advice on the San Antonio TX area. Neighborhoods with a good rental market, up and coming neighborhoods, neighborhoods to avoid and any/all resources in that market. Would also be great to find a mentor if anyone was out there and willing to help. Thanks!You’re ALWAYS better off investing locally, where it’s easier to:
- Learn the market
- Network to find deals
- Network to find contractors
- Be more hands-on
- Driveby property to keep tabs on it
- Network to find a decent Property Management Company (PMC)
If you invest OOS, your biggest challenge won't be finding properties to meet your goals on paper, it’ll be successfully outsourcing all of the above.
The biggest mistake we see OOS investors making in our market, over and over again, is not fully understanding Neighborhood/Property/Tenant Classes and how they impact your probability of success!
They all run their ROI numbers assuming Class A results – when buying Class B, C & even D rentals.
Then they’re shocked when their performance expectations aren't met😞
If you choose to invest OOS, and have little to no landlord experience, we highly recommend targeting Class B Neighborhoods/Properties/Tenants. If you target Class C, you better be prepared emotionally & financially for plenty of challenges.
You can find Class B properties in the Midwest to BRRRR, but it will take more digging and YOU will need to understand how to analyze & identify them - because a lot of agents, wholesalers, PMCs, etc. will try to sell you Class C or D misrepresented as Class B:
- Many of them don't know/care what Class the properties are, so they're incompetent.
- Others know exactly what they are doing, so should be labeled as crooks!
EITHER WAY YOU LOSE!
Here's some copy & paste advice you might find useful:
Why is Property Class so important for investors to understand and apply in their investing strategies?
Because the Property Class dictates the Class of the tenant pool that the property will attract.
The Tenant Class greatly impacts rental income stability and property maintenance/damage by tenants.
Both Property Class and Tenant Class will affect what type of contractors, handymen and property management companies you should target and be willing to deal with a property.
The Property Class will also impact the maintenance & renovations you do to, “Maintain to the Neighborhood”.
Why is that important?
Well, if you buy & renovate a property in Class D area to Class A standards, what Tenant Class will actually rent it?
Or, if you put several Class D tenants in a Class A four-plex, what do you think will happen to the property?
So, if you fail to apply the correct assumptions to a property, your expectations won’t be met, and it may even be a financial disaster.
We use the following to rank Property Classes, in order of importance:
- Property Tenant Pool: closely linked to location, but not always.
- Property Location: closely linked to tenant pool, but not always.
- Property Condition & Amenities: it’s important to, “Maintain to the Neighborhood.”
Key metrics for each Property Class:
Class A Properties:
Tenant Pool: Majority of FICO scores 680+, no convictions/evictions in last 7 years.
Tenant Default: 0-5% probability of eviction or early lease termination.
Section 8: Class A rents are too high and won’t be approved.
Vacancies: 5-10%, depending on market conditions.
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.Class B Properties:
Tenant Pool: Majority of FICO scores 620-680, some blemishes, no convictions/evictions in last 5 years.
Tenant Default: 5-10% probability of eviction or early lease termination.
Vacancies: 10-15%, depending on market conditions.
Cashflow vs Appreciation: Typically, 1-3 years for positive cashflow, balanced amounts of relative rent & value appreciation.
Section 8: Class B rents are usually too high for the Section 8 program.Class C Properties:
Tenant Pool: Majority of FICO scores 560-620, many blemishes, but should have no convictions/evictions in last 3 years. Verifying recent 2-years of rental history very important! Same for 2-years of job/income stability.
Tenant Default: 10-20% probability of eviction or early lease termination.
Section 8: Class C rents usually meet program requirements, proper screening still recommended.
Vacancies: 10-20%, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Should cashflow immediately, at the lower end of relative rent & value appreciation.
Class D Properties:
Tenant Pool: Majority of FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, but should have no convictions/evictions in last 12 months. Verifying last 2-years of rental history and income/employment extremely important to find the “best of the worst”.
Tenant Default: 20-30% probability of eviction or early lease termination.
Section 8: Class D rents meet program requirements, often challenges to pass Section 8 inspection.
Vacancies: 20%+, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation.
Where did we get our FICO credit score information from?
Check out this chart:
FICO Score
Pct of Population
Default Probability
800 or more
13.00%
1.00%
750-799
27.00%
1.00%
700-749
18.00%
4.40%
650-699
15.00%
8.90%
600-649
12.00%
15.80%
550-599
8.00%
22.50%
500-549
5.00%
28.40%
Less than 499
2.00%
41.00%
Make sure you understand the Class of properties you are looking at and the corresponding results to expect.
Metro Detroit has 132 cities, the City of Detroit 183 Neighborhoods, which we’re analyzing and classifying. Check out the map on our website where we’ve made this all easy to follow.
We can also share numerous examples of properties & portfolios we’ve assisted investors with!
DM us if you’d like to discuss this logical approach in greater detail!
Horror Stories from those that did NOT Understand What they were Buying:
https://www.biggerpockets.com/forums/48/topics/1137397-baltimore-a-path-to-never-ending-pain
https://www.biggerpockets.com/forums/432/topics/1231840-sell-at-a-loss-or-rent-at-a-loss
https://www.biggerpockets.com/forums/311/topics/840134-memphis-turnkey-tenant-turnover-costs
Logical Property Management4.9453 Reviews - 8moTodd AndersonPro MemberReal Estate Agent · Cape Coral, FL · Member since 2023 · 392 posts · 175 votes
Welcome to BP
May I suggest that you look at New Construction rentals. When I talk with investors in your position, and it is often. I bring up the idea of Build to Rent. It has a few advantages for investors in your position.
With your idea of investing and growing for the next 10- 14 years, when buying knew you can be confident that you will have few to no capital expenditures. Many of the Capx that would be needed have no ROI. You get no more money for a old house with a new roof.
You can get a property that will normally rent for more and appreciate better. New has more value than old.
You are easily able to do a Cost segregation report and depreciate quicker. Because everything is new doing the cost Seg is easy, you have a baseline. You then may be able to use a accelerated depreciation schedule to wright of more of your income.
The last thing many investors are not aware of. Builders are able to give far better incentives to buyers than sellers of existing properties. Many of the investors I work with are able to find fixed interest rates in the 3s right now in today's high interest rate market. We are also able to negotiate with the builders to offer free property management on may new homes.
Let me know if i can answer any specific questions.
- Inland Empire, CA · Member since 2017 · 151 posts · 79 votes8moHey Paul, I’m based out of SoCal/Temecula area. My partners and I invest out of state as well in DFW, however I have a bunch of contacts/operators in the San Antonio/Austin/Houston area. Happy to connect, get to know each other a bit and see if can help
- Member since 2025 · 12 posts · 12 votes8mo
Quote from @Garret Rumbea:
Hey Paul, I’m based out of SoCal/Temecula area. My partners and I invest out of state as well in DFW, however I have a bunch of contacts/operators in the San Antonio/Austin/Houston area. Happy to connect, get to know each other a bit and see if can helpGarret, thanks for your message. I'd love to touch base to learn more about your team has experience with, pick your brain and meet your contacts. Ill DM you.
- Member since 2020 · 6 posts · 11 votes8mo
@Garret Rumbea hey Garret! Feel free to DM as well I am interested to hear about your experience in the Texas area
- Inland Empire, CA · Member since 2017 · 151 posts · 79 votes8mo
Quote from @Paul Maldonado:
Quote from @Garret Rumbea:
Hey Paul, I’m based out of SoCal/Temecula area. My partners and I invest out of state as well in DFW, however I have a bunch of contacts/operators in the San Antonio/Austin/Houston area. Happy to connect, get to know each other a bit and see if can helpGarret, thanks for your message. I'd love to touch base to learn more about your team has experience with, pick your brain and meet your contacts. Ill DM you.
For sure. Sent you a DM a few days ago. Looking forward to it.
- 8moTravis TimmonsPro MemberRental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
If you don't have cash for a down payment, do not use 100% HELOC funds as a down payment for your first investment property in a city that you likely have never been to. 100% leverage just puts too much pressure on the house to perform.
I lived in Texas for 14 years and spent a few of those in San Antonio at least 1-2 times per month for work. It's kind of a rough town and is very block to block within the city. There are some great suburbs and areas on the north side that I like, but on the whole It looks a lot better on paper than in person as I see it.
My guess is that you are like most of our peer group as we age into our 40s - most of your wealth is in primary home equity and retirement accounts that you cannot touch until you are 59. You're on the right track trying to shift some of that wealth to more accessible investment vehicles. I just don't like treating a HELOC like it is cash. I'm not anti-HELOC...I just think that it is a short term debt instrument. If you can't get in and out of a deal without paying it off in 1-3 years, it's probably a bad idea (i.e. for flips and BRRRR type projects).
- New to Real Estate · San Diego, CA · Member since 2017 · 27 posts · 34 votes8moHi Paul, I’m in the same situation. I live in San Diego and looking to invest OOS. Haven’t picked a market yet. I’m still analyzing markets. Good luck on your search.
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes8mo
Quote from @Paul Maldonado:
Hello BP community,
I am hoping to dive into rental property and slowly build a portfolio that will help me retire at 55 (I'm 41 now).. I have a high W2, so also looking for the tax benefits. My current home has a quite a bit of equity so I am looking to use HELOC as down payment on a multi-unit bldg in the San Antonio area. My plan would be to buy a property once a year, maybe more, leveraging as needed and then paying those properties down.
I live in California and would love some advice on the San Antonio TX area. Neighborhoods with a good rental market, up and coming neighborhoods, neighborhoods to avoid and any/all resources in that market. Would also be great to find a mentor if anyone was out there and willing to help. Thanks!While San Antonio is nice, I've invested there myself. I'm focusing on Phoenix since the prospects are better right now. It seems Phoenix is closer to California, unless I'm facing the wrong direction, so I'm wondering why San Antonio is chosen over the easier and growing market next door?
- 8moJames JonesPro MemberInvestor · Collierville, TN 38017 · Member since 2017 · 597 posts · 449 votes
Welcome, Paul. Your plan is thoughtful and realistic, which already puts you ahead of most new investors.
A few high-level points before getting specific to San Antonio:
• Using a HELOC can work, but only if the first deal cash flows comfortably after accounting for the HELOC payment. A lot of people underestimate that drag.
• Buying one property per year is a solid pace. Consistency beats speed, especially while you’re learning a new market remotely.
• Tax benefits come from depreciation and cost segregation, not just ownership, so make sure your CPA actually understands real estate investing.
For San Antonio specifically, I’d focus less on “hot” neighborhoods and more on rent durability: working-class areas with steady employment, simple housing stock, and strong tenant demand. Avoid areas where deals only work if rents grow aggressively or appreciation saves the math.
Because you’re out of state, your local team matters more than the zip code. I’d prioritize:
• An investor-friendly lender who understands small multis
• A property manager with proven systems (not just good reviews)
• Conservative underwriting using in-place rents, not projections
One last thought: don’t rush to scale leverage early. Your first goal isn’t maximum growth, it’s building a repeatable process you trust. Once that’s in place, scaling becomes much easier and much safer.
- Member since 2025 · 12 posts · 12 votes8mo
@James Jones thanks so much for the thought out message!
- 8moNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
quick, candid reactions.
1. you can't buy something using a HELOC for the down payment, and other debt for the rest. you'll just lose money. a HELOC has to be used as some kind of short-term strategy with a refinance.
2. tax benefits are definitely a major component, and that's a question for your CPA, as it's going to be dependent on the totality of your financial situation. you may or may not be able to benefit from passive losses without having REPS. if you're CPA is reasonably competent they should be able to do some "what if?" planning with you.
3. SA is fine to invest in if you're going go there in person and build a team. if you can't do that, i'd pick a market where you can. so many CA investors buy in a market they picked solely because of price and just get absolutely crushed. see the threads that @Michael Smythe posted. what are you going to do that's different than what they did?
4. 14 years is definitely enough time to build a portfolio, but IMO we are in an equity market right now and not a cash flow market. it's spectacularly difficult to replace a high W2 with actual cash flow from LTRs right now.
happy to help further - nothing to sell
- 8moMike PaolucciBusiness MemberRealtor · Columbus Cleveland Dayton, OH · Member since 2022 · 492 posts · 550 votes
Investing in good school districts has always done well for me vs buying a cheaper property and going purely for cashflow. I've had longer staying tenants with less maintenance issues / less demanding tenants.
Reafco - Mike Paolucci 512 Reviews - 8moPaul NegroPro MemberMember since 2021 · 2 posts · 3 votes
I was actually trying to find a way to use a HELOC as a down payment also, but incorporating it with the BRRRR strategy. I just cant seem to wrap my head around covering both the remodel and downpayment with the refinance. I have a ton more research and reading to do on this subject but its the first time I have seen someone else on this site talking about using a HELOC as a downpayment.
Nick,
If you dont mind explaining a bit more about your first point where you said "you can't buy something using a HELOC for the down payment, and other debt for the rest. you'll just lose money."
My goal was to buy my first rental property with the HELOC for a down payment and rehab. I would then rent it out which pays the PITI and 75% of the HELOC interest payment. The tenant pays utilities. I personally would cover the rest of the interest only payments on the HELOC for a couple of years to give the property time to appreciate, (3 years max was the plan) and then refinance to pay off the HELOC. Leaving me with a cash flowing rental property. Does this make sense?
Thanks - 8moNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
it makes sense, but i don't think it will work; 3 years is not enough time for it to appreciate.
if you add up all the costs you'll be paying a fortune in interest.
- Member since 2011 · 152 posts · 113 votes8mo
Yes, I should have been more clear about using a HELOC or hard money lending. These types of loans are used routinely around here. Both are tools that are often useful, but just like any other power tool, the same tool can't be used for every job. HELOCS and hard money loans are best used for TEMPORARY financing when acquiring or rehabbing in order to get from point A to point B, but they are not for use as long-term financing for rentals, nor should they be kept in place when long-term financing is put into place on a property. If you get a project going by using credit lines or hard money, you must be sure going in that your permanent loan will be great enough to pay off all the underlying loans on the day you close on your mortgage.
- Investor · Dallas, TX · Member since 2026 · 52 posts · 9 votes7mo
Hi Paul, i know you've got a lot of helpful replies.
Even tho its good to avoid bas Zip, there are good Zip area that won't work with your Numbers. ARV, PITI e.t.c
you just have to run your own number at your own pace.
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes7moI invest both in Texas and Arizona. Texas taxes are far higher. I've turned my focus to Arizona for now until Texas gets the Tax situation under control. For you, the trip is a lot easier to Phoenix.
Quote from @Paul Maldonado:
Hello BP community,
I am hoping to dive into rental property and slowly build a portfolio that will help me retire at 55 (I'm 41 now).. I have a high W2, so also looking for the tax benefits. My current home has a quite a bit of equity so I am looking to use HELOC as down payment on a multi-unit bldg in the San Antonio area. My plan would be to buy a property once a year, maybe more, leveraging as needed and then paying those properties down.
I live in California and would love some advice on the San Antonio TX area. Neighborhoods with a good rental market, up and coming neighborhoods, neighborhoods to avoid and any/all resources in that market. Would also be great to find a mentor if anyone was out there and willing to help. Thanks! - Member since 2025 · 12 posts · 12 votes7mo
The price point in Phoenix looks higher, but Ill explore it. Thanks for your feedback.
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes7moPrice point isn't the issue. I've bought $200,000 houses for $10 down and I've bought $750,000 for zero down. Each creative deal is based on interest rate you rate taking over and ability to make those payments. It provides a consistent flow of deals at cheap money. I can explain.
Quote from @Paul Maldonado:
The price point in Phoenix looks higher, but Ill explore it. Thanks for your feedback.
- 7moMelissa JusticeBusiness MemberRental Property Investor · Phoenix, AZ · Member since 2024 · 518 posts · 1k+ votes
Welcome to the journey! San Antonio is a solid market for rental property, especially if you’re looking at long-term wealth and cash flow.
One thing I'd add - I know of new build properties in the San Antonio area that already have tenants in place. Builders are currently offering pretty strong incentives, like buying down your interest rate or giving cash back post-closing, which can make your initial financing much easier. Using a HELOC as your down payment and leveraging these builder incentives could really accelerate your portfolio growth.
It's always important to do your due diligence on crime, schools, and rent comps.
If you want, I can point you to some of the specific new builds that fit your strategy with tenants already in place and the current builder incentives- they’re hard to find if you’re not local. Feel free to reach out.Best of luck!
- 7moArman AhmedPro MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 921 votes
Quote from @Paul Maldonado:
Hello BP community,
I am hoping to dive into rental property and slowly build a portfolio that will help me retire at 55 (I'm 41 now).. I have a high W2, so also looking for the tax benefits. My current home has a quite a bit of equity so I am looking to use HELOC as down payment on a multi-unit bldg in the San Antonio area. My plan would be to buy a property once a year, maybe more, leveraging as needed and then paying those properties down.
I live in California and would love some advice on the San Antonio TX area. Neighborhoods with a good rental market, up and coming neighborhoods, neighborhoods to avoid and any/all resources in that market. Would also be great to find a mentor if anyone was out there and willing to help. Thanks!That timeline to 55 is totally doable with steady buys each year. San Antonio can work, but from California, you might find better cash flow and lower entry prices. The Midwest still has affordable multis, solid rent-to-price ratios, and landlord-friendly laws, which makes scaling way easier when you’re buying yearly. Out-of-state isn’t scary if you build a local team and treat it like a business. Sometimes, the boring, cash-flow markets beat the hot ones every time.
- 7moBo SmithPro MemberHinton, WV · Member since 2026 · 1k+ posts · 373 votes
Michael's point about Class designation is critical, and I want to add something important about using HELOC leverage out of state: you need boots on the ground. San Antonio's got solid fundamentals, but what works on paper from California can fall apart fast if you don't understand neighborhood dynamics and property management logistics.
The good news is San Antonio has a strong investor community and decent rental demand. The bad news is buying sight unseen with leverage is risky, especially when you're stretching across multiple deals. I'd slow down the one
- 7moMatthew BernalBusiness MemberInvestor · Austin, TX · Member since 2021 · 497 posts · 126 votes
Hey Paul, welcome to BP
Exciting time to be jumping in. Are you leaning more toward small multifamily like duplexes/fourplexes, or larger 5+ unit properties? And roughly what budget range are you targeting for your first deal?
Whats drawing you specifically to San Antonio? Do you have boots-on-the-ground support there already?
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