Hey everyone! I'm a newbie real estate investor that is planning to move to San Antonio TX to start buy-and-hold investing. The market seems to make a lot of sense, population growth, low unemployment, low entry point for a major city but I worry that I might be a little late to the party regarding cash flow.

I've analyzed about 50 deals off the MLS, and none seem to cash flow enough and many don't cash flow at all. I'm aware that it's not a good place to look for deals but it has me a bit worried. Would you say San Antonio is still a good market for cash flow investors or has the market become saturated with investors?

My goal is to buy-and-hold small MFH and maybe SFH in C+ or B neighborhoods that cash flow at least 300$/door after property taxes, insurance, vacancy, expenses, repairs, maintenance, property management, CapEx and mortgage (80 LTV.) Do those deals still exist?

My first property will be a 4-plex house hack.  

I would love to know the opinion of local investors and get some insight on some of the neighborhoods where this could work.  

i also was wondering about San Antonio area , areas are very tricky , i have family that lives there  , let me know how it goes  , good luck !  if you ever need advice about Houston area  , send me a message   , good luck again !

Love the 4-plex house hack idea.  Think it's better to look at % returns vs. per door returns since that's the true measure of the success of an investment.  If you put down 3.5% on a house hack getting those types of returns are going to be a challenge in any market (except Detroit...).

The good news - on a house hack like that - with lots of leverage, your ROI is gonna be through the roof :)

Originally posted by @Richard Damian :

i also was wondering about San Antonio area , areas are very tricky , i have family that lives there  , let me know how it goes  , good luck !  if you ever need advice about Houston area  , send me a message   , good luck again !

What have you heard about the areas being tricky? I'll definitely keep you in the loop. Thank you and best of luck to you too!

Originally posted by @Johnny Wolff :

Love the 4-plex house hack idea.  Think it's better to look at % returns vs. per door returns since that's the true measure of the success of an investment.  If you put down 3.5% on a house hack getting those types of returns are going to be a challenge in any market (except Detroit...).

The good news - on a house hack like that - with lots of leverage, your ROI is gonna be through the roof :)

Good point Johnny, the ROI on a highly leveraged property would be excellent. My long term goal is to BRRRR enough buy-and-holds to replace my W2 income by time and a half. Meaning, once I move out and refinance to a 80%-75% LTV, I would need to still cash flow. Luckily, San Antonio has been seeing a healthy rent increase in the last 5 years and if that trend continues that could turn and ok deal into a good deal with a little patience. I'm wondering what ROIs and cash flow other San Antonio investors are seeing.

@Israa Ajam if it’s for sale on the market, it’s likely that the profits have all been stripped away.

You either have to make offers based on the returns you’re expecting (don’t anchor yourself on the list price even if it seems like you’re disrespecting the seller)

Or... try to make offers to distressed homeowners directly.

Originally posted by @Jimmy Le :

@Israa Ajam if it’s for sale on the market, it’s likely that the profits have all been stripped away.

You either have to make offers based on the returns you’re expecting (don’t anchor yourself on the list price even if it seems like you’re disrespecting the seller)

Or... try to make offers to distressed homeowners directly.

I agree, it's extremely hard to find deals on the MLS. Thank you for the advice about making offers with the numbers that work for me and ignoring the list price. Something I imagine would be a challenge in a hot market like San Antonio but ultimately, it's a numbers game.

I do plan on driving for dollars when I move there to look for distressed properties as a first step. Maybe try to find out which properties are late on their taxes, network with successful wholesalers who leave enough meat on the bone and possibly send marketing letters. 

Maybe the answer to my post is, it depends on how hard you're willing to work to find deals. I would still love to hear from local investors about their success with ROI and cash flow just to get a clearer idea about the market.

@Israa Ajam

The On-Market game is tough here. Right now there’s so much competition for small multis that the moment one hits the market the sharks are all over it and the multiple bid situation prices a lot of people out.

Have you been able to connect with any sources of Off-Market inventory? Although much of it may not make complete sense for you, you may have better luck at getting in front of opportunities that you can capitalize on before they hit the market. You’ll have to have your ducks in a row to give you the ability to act with enough speed, especially with FCFS deals. Having your financing in order, contracting/inspection teams in place, and property management/listing agents or brokers involved as early on in the process as possible will give you the competitive advantage you need and the confidence to go for the right deal when it comes along.

Network network network! Best of luck!

Cheers!

You are 100% right, it is a matter of how hard you are willing to work to find a deal. If you want to be lazy and go to the MLS, YOU WILL pay too much and not meet your goals.

If you call one the BIG Wholesalers YOU WILL over pay, big time. Those are the easy ways to find a house(NOT a deal). They don't leave a little meat on the bone, they strip it clean, boil the bone for soup and then tell you there is plenty of meat, you just have to know what you are looking at.

There is no reason that you can't start marketing to find deals from wherever you are. You will not find a deal in a few days or in a few weeks. It will take months if you are going to start sending cards or letters to people behind on taxes or mortgages, BUT you will find DEALS.

Cash flowing 300$+ per door in year 1, with a PM, on any 1-4 property in San Antonio is a fairly unrealistic standard to have at the moment. That being said I have helped one out-of-state investor pick up 2 separate single family rentals that cashflow $270, and $200 each respectively. But those do not come across my desk every week.

Also, for the househack I would definitely recommend managing this yourself. Easy to save the 7-10% PM fees, especially when you're already under the same roof as your tenants.

Since you're looking in San Antonio, and your long term goal is to replace job income, plug all the numbers into some of the rental or BRRRR calculators here on BP, and see what cash flow and appreciation your investment is estimated to have 10 years down the road. You'll find the numbers become much more impressive. Year one results just aren't a great measure with the heat of our market.

When you are analyzing the MLS , go one step further when you see that it won't cash flow. Work the numbers backwards and ask, at what price will this property cash flow?  This will 1) help you know a deal when you see it and 2) Might give you some confidence to make an offer close to your number. Offers are free to make. And sellers are free to say no. But they might say yes if you give them the opportunity. San Antonio can be high for days on market compared to some other metros, and you never know when a seller has become tired of holding out. 

Originally posted by @Christopher Campbell :

@Israa Ajam

The On-Market game is tough here. Right now there’s so much competition for small multis that the moment one hits the market the sharks are all over it and the multiple bid situation prices a lot of people out.

Have you been able to connect with any sources of Off-Market inventory? Although much of it may not make complete sense for you, you may have better luck at getting in front of opportunities that you can capitalize on before they hit the market. You’ll have to have your ducks in a row to give you the ability to act with enough speed, especially with FCFS deals. Having your financing in order, contracting/inspection teams in place, and property management/listing agents or brokers involved as early on in the process as possible will give you the competitive advantage you need and the confidence to go for the right deal when it comes along.

Network network network! Best of luck!

Cheers!

Sorry for the late reply! Thanks for giving me an outlook on current market and good advice about having all my ducks in a row. I haven’t connected with off market deal providers yet. As soon as I move to the area I’ll connect with local investors and get to know the different neighborhoods. Happy investing! 

 @Rick Pozos : thank you Rick! This is the kind of motivation I need to start marketing. It also won’t hurt to resell any extra deals I don’t want to keep to continue to fund my buy and holds. 

 

Originally posted by @Matt Stricklen :

When you are analyzing the MLS , go one step further when you see that it won't cash flow. Work the numbers backwards and ask, at what price will this property cash flow?  This will 1) help you know a deal when you see it and 2) Might give you some confidence to make an offer close to your number. Offers are free to make. And sellers are free to say no. But they might say yes if you give them the opportunity. San Antonio can be high for days on market compared to some other metros, and you never know when a seller has become tired of holding out. 

Thank you, that’s an excellent point! It then comes down to reaching out enough buyers until I find the a property that works for me. Plus with how uncertain market is and will be in the upcoming months, this might motivate sellers more. I look forward to your virtual meeting in October! 

Much good advice here. Cash flow is still possible.  You'll have to go off-market, likely. I wish I had started with a house hack 4 plex but I didn't know all of these strategies back then. If seller is stuck on price, remember that you may be able to offer their price at your terms if you can find a win/win.  This becomes easier when you can communicate directly with a seller and not use a middle person such as an agent.  

Best of luck!