San Antonio mulit family rental investment - which area is better

25 Replies

Hello Everyone,

I am a newbie investor  looking for multi family properties in San Antonio,TX. Found a rehabbed one (old home) near Randolph AFB next to windcrest where there is a STEM school . 

I am not aware of the area but the Cap rate and good price is too good to pass.

I am looking for a decent cash flow but at the same time need good tenants and don't want to go through any roughness since I am out of state investor and there is going to be a property mgr taking care. Any advice ,suggestions on areas  need to focus will be appreciated.

Thanks

Mila

Mila,

Be careful and make sure to get accurate rental comps, some agents have a tendency to list properties with inflated rents. It's hard to find a true deal when searching for multifamily properties on the open MLS in San Antonio right now. That's not to be said that they don't come available from time to time, but when they do, they go quickly. If a property has been sitting for any length of time, you have to wonder why.

I would take a look at the West side of town near Bandera and 1604, there's a couple of different turnkey duplex subdivisions in that area. B- 1% deals come up from time to time and they have both the rents and the tenant class you're looking for. I would try and stick to the North, West, and some area's in the NE. Downtown San Antonio (Tobin Hill, Alta Vista, Beacon Hill, Woodlawn Lake, Dignowity Hill etc.) are great locations if you're looking for value-add opportunities.

Good luck moving forward and reach out if you need anything. 

Thank you Andrew and Sterling for the timely response! Appreciated..

All depends on your budget and investment horizon. The closer you could get to the Pearl the better. B and C MF is very competitive in SA in good locations. In loop land (outside 410 and 1604) you can find a few deals but often times you will be competing with declining neighborhoods and a lot of new builds over supplying the market. What is your criteria?

the randolph windcrest area has a VERY specific line for perpetuity and economical status.. study that area with haste

 @Jake Harris   My criteria is $200-$250K for duplex and I can go more  for 4-plex if it gives a decent cash flow. Since its my first rental investment,I am leaning towards good neighborhood /property condition with some decent cash flow. I am still researching but some of the NE side like Oconnor appears to be attractive and matches my criteria but skeptical again .....

@Mila Andy Welcome to BP Mila and good on you for looking into REI. I would suggest extreme caution I don't mean to sound rude but I see wayyyyyyy too many ignorant California investors throw their money here and expect returns and then they fail to maintain the property, or hit a road bump and bam the property is back up for sale in a couple of months. Really do your due diligence and focus on the numbers and property. Don't listen to some agent or person because they are just focused on the commission and don't really care about your investment most of the time. Take the time and spend the money to fly out here and stay here for a week or so and drive around town, walk around the areas and get a true feel of the streets, neighborhoods and areas. This money may seem like a waste, but trust me it will save you tens if not hundreds of thousands of dollars by helping you avoid bad deals and knowing the area you will be investing in. There are plenty of better opportunities other than that area. You are looking at a pretty low income and rough housing market that I personally wouldn't walk around at night in. It all depends on what kind of tenant or buyer you have in mind, some people are tough and can handle the tenants and higher risk, and others can't. I would recommend the Alamo Ranch area, Laurel Mountain Ranch area, Sea World Area and UTSA or Bandera area. These are good places to start in my opinion. My best recommendation is to fly out here and get a feel for San Antonio yourself. Once you have done that find someone you trust with your life because you will be heavily reliant on them, and you are entrusting them with quite a bit of money and risk so make sure they are dependable and honest. Set up interviews with the people you plan to work with here when you come and visit and see them in person, many people are very different in person than they are online or on the phone as I'm sure we all know. It seems you are pretty good at focusing on the numbers but also look at the area on google street and the crime on spotcrime.com there are plenty of other factors besides price involved. Trust your gut and do what you think is right. Good luck!

Originally posted by @Michael Guzik :

@Mila Andy Welcome to BP Mila and good on you for looking into REI. I would suggest extreme caution I don't mean to sound rude but I see wayyyyyyy too many ignorant California investors throw their money here and expect returns and then they fail to maintain the property, or hit a road bump and bam the property is back up for sale in a couple of months. Really do your due diligence and focus on the numbers and property. Don't listen to some agent or person because they are just focused on the commission and don't really care about your investment most of the time. Take the time and spend the money to fly out here and stay here for a week or so and drive around town, walk around the areas and get a true feel of the streets, neighborhoods and areas. This money may seem like a waste, but trust me it will save you tens if not hundreds of thousands of dollars by helping you avoid bad deals and knowing the area you will be investing in. There are plenty of better opportunities other than that area. You are looking at a pretty low income and rough housing market that I personally wouldn't walk around at night in. It all depends on what kind of tenant or buyer you have in mind, some people are tough and can handle the tenants and higher risk, and others can't. I would recommend the Alamo Ranch area, Laurel Mountain Ranch area, Sea World Area and UTSA or Bandera area. These are good places to start in my opinion. My best recommendation is to fly out here and get a feel for San Antonio yourself. Once you have done that find someone you trust with your life because you will be heavily reliant on them, and you are entrusting them with quite a bit of money and risk so make sure they are dependable and honest. Set up interviews with the people you plan to work with here when you come and visit and see them in person, many people are very different in person than they are online or on the phone as I'm sure we all know. It seems you are pretty good at focusing on the numbers but also look at the area on google street and the crime on spotcrime.com there are plenty of other factors besides price involved. Trust your gut and do what you think is right. Good luck!

 What type of price to rent ratios would new construction homes get the areas you mentioned?

Originally posted by @Mila Andy :

 @Jake Harris  My criteria is $200-$250K for duplex and I can go more  for 4-plex if it gives a decent cash flow. Since its my first rental investment,I am leaning towards good neighborhood /property condition with some decent cash flow. I am still researching but some of the NE side like Oconnor appears to be attractive and matches my criteria but skeptical again .....

Why did you choose San Antonio? Those prices are reasonable, are you trying to hit a certain CAP rate or is your plan for more long term appreciation?

Hi Mila,

I bought a new construction triplex located in Converse TX (1 mile from Randall base).  Price was $320 a year ago (when I bought) and I know some new duplex $299k are for sell in that same are (7314 Colina Way, Converse 78109).  Rent average $1225 in that area.

I'm also investing on a 4-plex in the Selma TX area (near I-35 north and 1604).  They go for $540k with good cash flow.

Keep looking in the area of Kirby, Converse, Universal City and Live Oak - all good in my opinion

Francois

Originally posted by @Francois Frigon :

Hi Mila,

I bought a new construction triplex located in Converse TX (1 mile from Randall base).  Price was $320 a year ago (when I bought) and I know some new duplex $299k are for sell in that same are (7314 Colina Way, Converse 78109).  Rent average $1225 in that area.

I'm also investing on a 4-plex in the Selma TX area (near I-35 north and 1604).  They go for $540k with good cash flow.

Keep looking in the area of Kirby, Converse, Universal City and Live Oak - all good in my opinion

Francois

 Hi Francois,

Are you able to provide more info. on the 4-plex in Selma? Is there a builder website?

Builder is SAMA Developers, LLC

You will find all the info on the phase two 4-plex development on www.loopnet.com (search for multifamily in Selma TX).

@Mila Andy I could see investing in San Antonio from out of state being tough. There is plenty of opportunity in SA but you need to add value. There are rarely turnkey opportunities just sitting on the MLS. If you get creative and you aren't afraid to rehab you can find good returns. That being said that is very difficult to do from out of state. I live in Austin so i can drive down to monitor rehabs and meet with my PM.

Maybe visit here to investigate and find someone you can trust to be your feet on the ground?

Originally posted by @Francois Frigon :

Hi Mila,

I bought a new construction triplex located in Converse TX (1 mile from Randall base).  Price was $320 a year ago (when I bought) and I know some new duplex $299k are for sell in that same are (7314 Colina Way, Converse 78109).  Rent average $1225 in that area.

I'm also investing on a 4-plex in the Selma TX area (near I-35 north and 1604).  They go for $540k with good cash flow.

Keep looking in the area of Kirby, Converse, Universal City and Live Oak - all good in my opinion

Francois

 What do you consider good cash flow?  My quick calcs show under 3% cash on cash return if you put 20% down and you have a property manager.

Hi David, here's the math on my new Triplex in Converse TX (monthly)

* Rent $3650

* Expenses Tax $550, Insurance $195, Maint/Capex $120, Vacancy $300

* NOI $2485

* Loan $1633

* Monthly cash flow $852

My investment is $80k and I should hit around 12% ROI over a 12 month period. Of course this is all projected, so I'll get actual numbers by next spring

Originally posted by @Francois Frigon :

Hi David, here's the math on my new Triplex in Converse TX (monthly)

* Rent $3650

* Expenses Tax $550, Insurance $195, Maint/Capex $120, Vacancy $300

* NOI $2485

* Loan $1633

* Monthly cash flow $852

My investment is $80k and I should hit around 12% ROI over a 12 month period. Of course this is all projected, so I'll get actual numbers by next spring

 Have you purchased a 4-plex in Selma yet? What do you think the math will look like on the 4-plex?

I just wanted to plug myself into this conversation as I am also looking into investing in the SA market.

@Mila Did you have any luck finding a good area or connecting with some people?

Also, are there any recommendations for investor friendly Real Estate Agents, Lenders, and Property Managers in the San Antonio areas? 

Kevin, I have two signed contracts with builder SAMA for the quads in Selma TX.  Here are my numbers:

- Current asking price is $539k and I got mine for les than $500k

- Rent projection is $5200/mth (each unit rent ~$1300 through my Zillow assessment)

- Expenses are Tax $990, Ins $210, Maint/CapEx 50$, Vacancy $600, HOA $120

- NOI is $3230

- Commercial Loan $2187 (assuming 25% down, 5.25% interest over 25yr which is what I am currently looking at with SSFCU)

- Gross profit $1043.  On an annual basis, cash-on-cash should be around 10% (not the best, but should cash flow ok)

Great development project.  Phase 1 has been finished a year ago with 50+ quads all rented out.  Phase 2 is just starting (infra done).  First quads delivery should be around 1Q19

Good luck

Francois

Originally posted by @Justin Kane :

the randolph windcrest area has a VERY specific line for perpetuity and economical status.. study that area with haste

 Justin - that's a striking statement. I have a spreadsheet of 'pockets' in San Antonio I'm working my way down, and Windcrest/Universal/Live Oak is on my list. I'm going to try to decipher what you said but any additional insights appreciated!  Feel free to PM me

Originally posted by @Francois Frigon :

- Current asking price is $539k and I got mine for les than $500k

- Rent projection is $5200/mth (each unit rent ~$1300 through my Zillow assessment)

- Expenses are Tax $990, Ins $210, Maint/CapEx 50$, Vacancy $600, HOA $120

- NOI is $3230

- Commercial Loan $2187 (assuming 25% down, 5.25% interest over 25yr which is what I am currently looking at with SSFCU)

- Gross profit $1043.  On an annual basis, cash-on-cash should be around 10% (not the best, but should cash flow ok)

 $990 for property tax seems really low? Most of the areas i have been looking at around central Texas are close to 2.2% Has the tax rate been adjusted for the new construction or is that the tax on the lot?

Hi Jim,  These are all monthly figures

For the quads in Selma TX, what's the earnest money they had asked for? 

Since delivery in the 1st or 2nd Quarter in 2019, they are asking for very high earnest money (100k). Are they trustable? 

Thanks,

Sharad 

Originally posted by @Francois Frigon :

Kevin, I have two signed contracts with builder SAMA for the quads in Selma TX.  Here are my numbers:

- Current asking price is $539k and I got mine for les than $500k

- Rent projection is $5200/mth (each unit rent ~$1300 through my Zillow assessment)

- Expenses are Tax $990, Ins $210, Maint/CapEx 50$, Vacancy $600, HOA $120

- NOI is $3230

- Commercial Loan $2187 (assuming 25% down, 5.25% interest over 25yr which is what I am currently looking at with SSFCU)

- Gross profit $1043.  On an annual basis, cash-on-cash should be around 10% (not the best, but should cash flow ok)

Great development project.  Phase 1 has been finished a year ago with 50+ quads all rented out.  Phase 2 is just starting (infra done).  First quads delivery should be around 1Q19

Good luck

Francois

Are you  managing the property yourself?  Assuming 6% management fee since they're quad, that would be another $312 for operation cost.

My husband and I have been property owners since 1993 and landlords since 1999 of three single-family homes and would be happy to help with anyone's properties in the San Antonio area, or scoping out potential properties you are considering purchasing (going to the property and doing an on-site look for you).  We currently have one flip underway(!) and looking to grow our own rental/owner finance portfolio in residential and commercial. 

If I were looking at properties outside my are, one thing I would be very cautious of is tenant screening.  I learned from a experience that I needed to run the prospective tenants' names myself, maiden and married, at the courthouse(s) in the county(ies) they lived in the last 12 years.  When I had my agent run this one, nothing came up under her "married" name (they ended up not even being married).  She was refusing to pay rent and threatening to sue us for increased medical conditions due to a plumbing leak she claimed was in the slab.  We had 3 master plumbers check out the property and nothing was ever found. These outlandish claims got me suspicious so I started to research her and found under her maiden name multiple alias's and several criminal charges, even for felony theft. The online tenant screening services usually only picked up what is available online only and not what is only at the courthouse itself.  If anyone knows of a more comprehensive service, please share!  Luckily, we were able to evict based on the fraudulent application, otherwise, we probably would have had to go to court for all her false claims of unhealthy living conditions (the house was a 2003 Centex in immaculate condition).   I've had a courthouse/title research business for 27+ years and should have known to do my own backup search but I trusted my agent's report.

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