Advice for purchasing a rental property in San Antonio

17 Replies | San Antonio, Texas

Hello, I am resident of San Antonio, I own my home and I am looking to invest in SFH rental properties. It seems like with the current market it will be difficult to obtain more than $150 a month in cash flow. Purchasing a rental with 20-25% down and financing over 30 years. I was hoping to find a way to invest for a better cash flow- or should I hope for appreciation and rising rental rates? I feel like our market might take a downturn at some point? The local market seems flush with rentals too. I have owned rental homes before with mixed results- my regret is not sticking it out and I plan to stick with it going forward. I do not want to be a long distance landlord- so I wish to invest in an area within a 20 mile radius from San Antonio. Any advice, experiences shared would be appreciated.

Most investors are attracted to San Antonio's strong rent growth & appreciation, and it is still a market where you can achieve a small positive cash flow in decent areas. The only investors that I know that are still hitting larger cash flow numbers here are those that are doing larger renovations and/or construction, or they're doing short term rentals.

@Karissa Martin San Antonio and the overall Texas boom is not stopping anytime soon, fed is pumping so much money into the economy and is expecting 6% GDP growth this year. I still see investors buying properties that meet the 1% rule in San Antonio but that is after a renovation. It's very difficult to find properties that cash flow well when they are turnkey. I suggest looking for a property that needs $20-$30K worth of work, get a fix & flip loan, increasing the value and rent, and then put long term debt on it. 

@Jeffrey Evans Thank you sir! I’m always happy to help anyone in anyway in the San Antonio and New Braunfels markets. So far for 2021 We’re averaging closing 40 to 50 discounted investment properties each month.

@Karissa Martin

I agree with @Joseph Cacciapaglia , the market has evolved in such a fashion that it's getting harder to hit bigger cash flow. Unless, you take-on bigger renovation, then there may be something there - although, bigger renovation means bigger risks. 

I'm bullish on San Antonio still; however, I play in the bigger renovation deals and willing to take on bigger risks b/c of my construction background. If you decide to go the wholesale route, like NWA, then learn the ins-and-outs of their system. Many times, you won't have the time to look deeper into the mechanical systems and seeing the inherent risks involved, so there are risks there as well. Good luck!

@Karissa Martin

I am currently investing out of state (I sign for my first investment property on Wednesday).  I live in Hawaii and buying a duplex in San Antonio.  I understand it is super nerve racking but I would suggest reading David Greene's book - 'Long Distance Real Estate Investing'.  It helped me.

I would suggest reading his book and analyzing properties everyday.  I have analyzed >100 properties and when I saw a property I wanted I jump on it.  Get on a REA email list and analyze everything that comes in.

Best of luck!!

Hey Karissa, I love SA's market and have several rentals. I believe in it's long term potential as we are the last affordable metroplex in Texas. A great way to achieve higher returns would be to go the Short-Term route. This comes with some additional effort but is worth it in my experience.

Hello @Karissa Martin , it's not that difficult to find properties cash flowing more than $150/month in SA if you're putting 20-25% down. I own 11 rentals in SA, and one in Seguin. 4 of them were picked up this year.

I would NOT recommend you jumping into a property that needs too much in rehabs because managing contractors is not an easy task.

Never invest for appreciation because that's not guaranteed.

Be careful with buying from wholesalers, many of them do NOT understand what a deal even looks like, and they're selling it for top dollar.

Maybe an issue you're having is the way you're analyzing properties. Maybe it's $150/mo with you being VERY conservative with all of your numbers. Nothing wrong with this but it will keep you out of a lot of properties.

I love the SA market and don't see it slowing down anytime soon, let alone take a downturn. Downturns happen when the market is overstretched. We're FAR from that.

SA is by far one of the most affordable markets in Texas, and its proximity to Austin makes it very desirable for people that do not want to spend a small fortune.

Here are my questions to help you better:

What are you factoring for your expenses from Gross cash flow?

How are you trying to find deals?

What price points are you targeting?

Do you have a preferred area of town?

FYI, I am NOT a wholesaler. I will simply share with you how I pick up my properties.

Feel free to DM too.

$150/mo seems typical in San Antonio. Not taking into account vacancies and repairs if it is an old house.

We have a rental there that is professionally managed, financed in 2018 with 15% down. After all operating expenses and financing costs, I'd say it's basically break even, perhaps even negative cash flow.

I would give up on the idea of buying for cash flow and consider if you are OK with several years of very low or no cash flow in order to get the other benefits. If you just want cash flow there are better options like hard money lending.

Originally posted by @Karissa Martin :

Where would I find contractors that do that kind of work? Can you recommend anyone? How do I get a fix and flip loan?

 Karissa, 

As a fellow SA Investor I have built a solid network of contractors that I refer clients to. If I can help, don't hesitate to reach out.

@Jonatan Barbera

Excellent response- in my opinion one of the best on this thread. I will speak for everyone on here when I say that we really appreciate your honest feedback and advice! Thanks so much for helping us with less experience learn the ropes.

Karissa, Hope you are finding some good investments. I currently have 15+ SFR. How you pick up the property is really key in determining the cash flow and profits you make. It could save you money if you worked directly with the sellers. I am not a Wholeseller or agent but would be happy to share some of my experiences with you.