Where should I do my first BRRRR in San Antonio, TX?!

Question

I need some help with the San Antonio neighborhoods! I live a little over an hour from SA in Fredericksburg and I'm getting myself set up to do my first BRRRR. I bought my first deal (four-plex) in TN last November, but I want to break into the TX market. I'm hoping to do a full day in SA in the next few weeks driving around and checking out different neighborhoods so I need some suggestions! I am most interested in staying in the West-North areas of SA simply because it's that much more accessible to me from Fredericksburg.

My biggest hangup right now is the market research and niching down on a couple of areas to focus in on. I would like single family or small multifamily and preferably B- tenants or above. I would like to focus in on some nicer areas (maybe quality is a better word?), mainly going for that "worst house in the best area" mentality.

I'm okay with less cashflow because I want to play the long game and I think San Antonio is going to continue to be a great place to hold real estate. I have an agent that's helping me already, but I'm also undecided on whether I will self-manage or hire that out so any recommendations for property managers or any other BRRRR related team members in the area would be appreciated. Thanks everyone!

Daniel Wheeler · Answer

There aren’t many secrets in the real estate game. Particularly SFH. Very low barrier to entry so everyone and their land scapers are doing it.

Find a house that matches your profile and swing away.

I doubt you would be able to buy on the northwest side (I-10 corridor -Boerne, scenic loop, Boerne stage, dominion, camp Bullis) and make any sort of number make sense.

You’ll be buying a high cost highly levered house with negative CF.

Fredericksburg seems to be a hot market particularly on the vacation rental front. If you live there, I would probably start there.

Nicholas Brumgard · Answer

@Evan Tuuk - Be Careful with the self managing, do your homework and make sure you have an established system to keep yourself out of trouble. The word of the day is Liability! I would never recommend it, as I am in the PM game, but many people try and can find success.

@Tanya Lechner has some great advice as you move into the market. You aren't going to want to be wrapped up in and multiple offers situations.

West of Lackland has been a growing area and may be a good target. I have also seen some investors come in and buy new if that is at all an option for you. Although many builders don't sell to investors. I do know LGI does. Maybe worth a look.

Betty Cruz · Answer

@aaron

@Aaron Francl Not sure if you have an ace realtor but know that it’s a different breed who know the ins and outs of buying for an investment property. @Tanya Lechner is top in class for that!

Tanya Lechner · Answer

Congrats on starting the process getting into SA! It is definitely a competitive market as others have mentioned (just about everywhere, especially outside of the 410 loop).

I’d suggest getting into the not as desirable areas (like west of downtown) and wait it out since you are planning to play the long game. Eventually that area will be as pricey as the rest and you are still able to cash flow on the lower price points. Those are older homes so plan for at least $50k in rehab! Cosmetic rehabs are few and far unless you plan to go hard on your own marketing.

Happy hunting!

Evan Tuuk · Answer

@Nicholas Brumgard Thanks for the words of caution. I'll check out that area.

@Matt Stricklen Good point. Contractors are to find here, too.

Tanya Lechner · Answer

it’s hard to go wrong is SA- 2 years ago I was telling clients they wouldn’t be able to find anything under $200k in the next 5 years and now the threshold is $300k (not all but most parts of town)!Look for anything that’s not moving! Usually new listings will have multiple offers but if you look past the 10 day mark there are deals. For example, 1407 Travis St because it’s 2 for 1 and has been listed since October!

Aaron Francl · Answer

@Evan Tuuk There you go. Yes, I’ve heard him and James Dainard (good follow on Instagram) both discuss BRRRR as an advanced strategy. But you nailed it. As long as you’re finding something that is not turnkey and you can add value to but be comfortable still leaving some in your deal, you’ll still well ahead of the game.

Good luck to you.

Evan Tuuk · Answer

@Shaun Witcher Thanks for the recommendation with the property managers. I will ask my realtor who he recommends.

@Aaron Francl Thanks for the advice. I am undecided on whether to self-manage or not. I'm working for an investor here in town and helping him manage two commercial buildings (30 tenants between the two) which has given me some confidence to self-manage. And you basically summed up my idea for this "BRRRR." I remember hearing someone talk about why BRRRR wasn't a beginner strategy (I think Pace Morby?) and it made a lot of sense. I told my realtor what I'm looking for is a "medium" rehab. I'm not interested in a full gut rehab yet - not looking to do full HVAC or electrical work, or ripping things to the studs. I want something to get my feet wet in the rehab world first. My thought is, if I get everything done and refinanced and 10% of the ARV gets left in the deal, I'm still pulling out more capital than I would have if I bought turnkey at retail.

@Tanya Lechner Thanks! Yes, it's super competitive. I've been trying to buy a house hack and my last offer I was outbid by $25k, and I offered over asking. Seems to be the norm these days. Any specific spots west of downtown that you feel are up and coming?

Aaron Francl · Answer

Hey Evan, first, I would highly suggest you self manage for the building types you mention. A handful of doors should be easily managed once you research a strong + repeatable process to screen and place.

BRRRR can be a bit of a more advanced strategy than what you hear/read. Sounds like you’re preparing yourself well but I’d highly suggest targeting a lighter rehab and practicing all the steps/mechanisms of the strategy rather than a full on BRRRR-dependent deal. Learn what it will take to manage a building, target a building that needs enough work that you can find ways to push rents up vs heavy/capex rehab all while you build a deep rolodex of reliable partners and skilled contractors. Eventually, once rents can be pushed up over time, there would be potential to refi that asset with your beefed up GRM metrics to fund your next project. If you’re confident at that point, then go for a full BRRRR project.

Where should I do my first BRRRR in San Antonio, TX?!

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