[Calc Review] Help me analyze this deal - San Antonio

16 Replies

Hey everyone,

New to the San Antonio area and actively looking to buy. I have experience buying in other states but not so familiar with the local rates for rent, insurance, garbage, sewage, elec fees for landlords owning multi-unit.  

This particular property is a triplex.  Anyone familiar with 78207 zip code could share experience on accuracy of my numbers?

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*This link comes directly from our calculators, based on information input by the member who posted.



Hey Colette,

I'm pretty familiar with San Antonio but relatively new to real estate investing.  A few things to know about 78207.  It is the poorest zipcode in San Antonio, but with that it is one of the areas that seems to have great potential and a lot of opportunity for appreciation.  78207 is on the west side of downtown and pretty much the other three sides have started to appreciate be renovated and this seems to be the last of those.  At first glance the rents for that area seem a bit high based on the size and location.  Just my two cents.

-Aaron

@Colette Chase Tri plexes in SA generally do pretty well.  78207 is a good rental market.  It is very hispanic area and will rent fairly easily and you will usually get long term tenants.  The numbers look good but where did you get your rental comps?  Rents in that area are generally $1 a SF and it says 1600 SF?  Also, you should have the tenants pay all utilities. If the property does not have separate meters for water and elec, you can submeter them and bill them back to the tenants - just make sure you have an addendum called a submeter agreement.  SA is a great cash flow market - especially having lived in Denver for 10 years ;)

@Arissa Pedroza   well noted on dollar per sq ft.  

So is it typical for all utilities to be covered by tenant, even for shared common areas (elec for hallway lights) in San Antonio?   Water in our CO properties are not metered so we usually pay that.  

@Troy Williams yes, tenants pay utilities here.  However, the owners are responsible for any vacant and a small portion for things considered common area.  I want to say its around 15%.   There are very strict regulations on submetering and you have to register the property as well as provide a submeter addendum with the lease.  When you get a utility bill, the owner pays it and then bills back the tenant based on square footage.

Hi, just curious on this. your description says "great size yard". I actually think this is not a good thing for MFH, as you'll need to pay for mowing the lawn, which could get pricey if the yard is too large. Is that included in your expenses? Additionally, i'm not an expert in MFH but is 5% estimate on repairs a fair estimate since the landlord is in charge of maintaining the common area? My final point is management fees - does that incorporate that tenant placement fee estimates? I assume with MFH the turnarounds are greater than SFH so placement fees might add up. Hope that helps!

@Colette Chase , I probably got to this post a bit too late for this to matter if you offer or not, but I'll leave some things to think about here anyway.

Firstly, I don't know this area so getting a true understanding of it is obviously key, but just looking at the projected monthly income compared to the total cost of the project makes me wonder if there's potentially a catch. And that catch usually is the property/neighborhood class. I looked up the crime rates of that zip code (a quick way to get a sense of neighborhood class) and compared it to all of San Antonio and found it has an extremely high crime rate. This is an easy way to tell that most likely it is a C to D (maybe warzone) neighborhood. Now based on this information, there are some factors worth considering such as tenants who are less likely to care for the property leading to higher repair costs, tenants who are more likely to be unable to pay rent or make it difficult to collect leading to higher vacancy/PM costs, and difficulties finding good team members (PM, contractors, etc.) who are willing to work in that area.

Another thing to consider is that the property is all 1br/1ba units. Tenants who live in 1br properties typically stay for shorter periods of time (I've been told to expect ~1yr), therefore this increases your vacancy rates and repair costs (to fix the place up for the next tenant).

Remember, I don't know this area so the things I have mentioned could not apply to this property, but they are things I believe are always beneficial to consider when you come across a property like this.

Good feedback @Austin.   Do you mind my asking which sites you use for checking crime rates.   I've tried Trulia and Richblockspoorblocks, but guessing there is something more accurate and current.

Hey Colette - 

I'm a little late to the party, but also thought I'd post my thoughts since I own a similar property in the neighborhood.  

First, to the area, its lower-end, working class (C-D Properties).  There's long term potential for appreciation, but it will take a while.  I am pro-78207, but be patient...like 5-10 years patient.

On the underwriting, purchase price seems typical for the area, but everything else seems off.  The initial repair costs is probably low depending on the condition, is it occupied?  Foundation problems are common for the area.  I ended up just shimming the foundation for my big house and it was still $3,000.  If I had sprung for full foundation it would have been $10,000 alone.  Closing costs and points are low on the schedule.  Rents...you might be able to get this, but it depends on the layout.  Insurance was actually high, but it might be a flood plain.

Utilities! Once you get a solid handle on the initial repairs and the rents check out, this would be the main question mark. Is it split or common? A lot of houses in San Antonio are old houses that were split into several "units".I have some houses that are common water, common gas, but never common electricity. On the gas and water, sometimes I do the RUBS, and sometimes I just eat the cost. I would be hard pressed to buy a house with shared electricity. First, there's the expense risk of how much your tenants are going to spend, but the real issue would be financing. Banks (or at least the ones I've used) want to know if they are putting a lien on a SFH or a MFH. What saved me in my case, was that the property had two meters since the 1930's so the City of San Antonio gave me a letter of nonconforming use, saying it was ok that my property was a duplex. I had another friend who attempted the same thing (in a house that looks very similar to yours) and was unable to get a letter, which was fine because he was in the due diligence phase, but it's something to watch out for.

Anyways, hope that helps.  Feel free to shoot me any deals you might be looking at.  MFH is tough in SA right now!

Kyle

Just from that little picture, it looks like a house that someone chopped up and called it a triplex. 78207 is pretty rough. If you are ok with that, go get it. I bet there is going to be plenty of turnover which means several hundred $$ to make repairs every time someone moves out.

$600+ for a one bed one bath with 2 other units right next to you is WAY over priced. 

I have lived in SA almost all of my life. There have been a number of initiatives to boost the west side. Its still pretty rough.

Greetings Everyone,

I am new to the investing and planning to consider buy duplexes on Shaenfiled rd just outside off 1604, in 78254 zip code. The duplexes will be delivered by late summer 2019, he is quoting $340k. Is the price right? not sure, a similar duplex by Marshall Meadows by Value builders are priced at $360k for a duplex. Can anyone let me know, is the price way too high? I am an outside buyer living in Houston.

Duplex price: $340k - $360k

Size: 2400-2500 sq ft/duplex -- (1250 sq ft/unit + 1 car garage)

Gated community

Location: Shaenfield rd off of Hwy 1604, ZIp code: 78254

Thanks in advance