San Antonio, TX - How to Understand This Market

31 Replies

I have been asked a lot both on Bigger Pockets as well as within my networks as to what my opinion is on the San Antonio market on where an investor should focus based on the type of deals they are looking for. This had been information that I only sent to someone that has contacted me and asked for it. I have recently been asked more and more and I figured it was time to just share my knowledge with the entire BP community.

In this post, I am going to break down the entire city based on my opinion of our market. My opinion is based on my knowledge and experience in the REI industry. Check out my profile if you are wanting to know more about me and my experience.

San Antonio is a very diverse market with a transportation system that has made our city much different than any other. Most other cities that I have studied have some of the best most expensive real estate closest to downtown. This is not the case as San Antonio currently sits. I agree with people in saying invest where the jobs are as people don’t want to drive an hour to work and fight traffic if they can help it. San Antonio, because of the military, built their roads system in the shape of a wagon wheel with major interstate and highways feeding our downtown area.

What this has caused is having the ability to live where you want to live as you can travel to pretty much every major employment district within 20 minutes without having to fight much traffic. You can see the effect this has had on our real estate pricing as some of the cheapest real estate you can find are right around our downtown area. I think the reason for this is because commercial developers could very easily build new building further away from the downtown corridor because the price of land and construction is more affordable. Taking those points into consideration is why I think our nicer more expensive homes are 10-20 miles from our downtown area.

So now that you have some background on the San Antonio market lets get to what deals come from where.

Rentals

I classify a rental property in San Antonio as something to produces enough cash flow that it is a self-sustaining investment. Meaning it covers property management and a CAPEX of 10% of the rental price. This usually means there is at minimum $250/month in cash flow over PITI if you are leveraging. We have always seen the best rental properties coming from the suburbs.

The NW/W and the NE/E are where we see and have done the majority of our rental property deals. Although as of lately we see a lot more coming out of the NE/E where the rent to value percentages are higher. Here is where I would go for the good ole fashion boring rental property that you can slowly build wealth, preserve it, and can retire on.

I like the areas following the 35 corridor because of the growth towards Austin. These would be the zip codes in the NE/E. This isn’t a blanket statement as there are still a few areas where I wouldn’t be looking to buy properties mainly in the East.

78244 – Just need to watch which neighborhood

78233

78217

78109 – Just need to watch the area

78239

78247

For the NW/W side

78250

78251

78245 – Just stay inside 1604 as you get outside the houses get a lot newer

78238 – Just watch the neighborhood

78240

Appreciation

Now for what most investors only look for is appreciation. If I had to make a bet on appreciation this is where I would go to get that exciting, risky, appreciation that you could quickly build wealth on. These are trends that I am seeing that I would bet on but they are still very dependent on the state of the economy and availability of funding for the renovation of commercial and city projects. So, while things look good there are projects that could get scrapped that could really mess an investment up.

Inside North 410. Areas are seeing a lot of movement with the older homes that are not historical. This area also pulls decent rents so you may be able to get some cash flow in these areas. Where we are seeing the most growth right now is along the major highways moving in. I like this area because as the downtown area is undergoing its revitalization you are seeing more and more people wanting to move closer to downtown which is showing growth moving to the North. Now along 410, people tend to like it because you can get the urban feel but still have easy access the 410 and the North side of the city. We are seeing that growth moving south because of the cheaper prices.

78213

78216

78212

78201

78230

Along 281 to the East and West, inside 1604. North of 1604 along 281 is the Stone Oak area where some of the best suburb style houses are. They are starting a five-year renovation of 281 outside 1604 taking out the stop lights adding 6 frontage road lanes, 6 expressway lanes, 2 HOV lanes, and flyovers connecting to 1604. Traffic is already extremely congested in this area and this is going to make it much worse for the next half decade or until the project is complete. Combine that with what is all going on downtown I am betting that you are going to stop seeing as much appreciation outside 1604 and start seeing it come back south along the 281 corridor to downtown.

78247 – lowest months of inventory in the city

78232

78216

High-risk High-Reward

Now for low-end big bets. Some of the cheapest real estate in the city is just to the east and west of downtown. Much like the east side of Austin was but now is some of the most expensive in the city. You can find cheap houses down there but there is no telling if they are ever going to take off in values. Some areas already are, and you are seeing houses being flipped for good profits. I know a lot of Austin people are buying property on the east side betting San Antonio to do the same as Austin did.

The only problem is they are betting on that to be their only strategy. This is pushing prices up on the initial purchase price but then they are just sitting on the properties not doing the renovations. If too many people buy these houses and never do anything with them it could affect the appreciation growth. There are a lot of projects that are in the cities plan and by private developers, but they are slow to take off. If these projects take off and are successful I would see these areas do well but you have the reverse side of that as well as they have been slow-moving projects. I would want to buy a property that at least still makes sense in today’s market. Get something that is at least livable that you can rent out and get a return on.

78207

78210

78203

78202

78204

78208

78234

As far as south side goes, which I describe as anything south of HWY 90 and downtown, I really don’t know much about it to give a good analysis. I do know that is where you see a lot of seller financing going on and your low end rentals (less than $1,000 Rents). I am starting to hear about pockets that are starting to do well but nothing that has made me want to venture to these areas. That said it is definitely something to keep an eye on as the city continues to infill and the city pushes for a more vibrant downtown.

Well there you have it. That is my opinion on the San Antonio market and what type of deals come out of where.

If you are interested in more information I put a market report out every month that follow what pricing is doing in what areas of the city.

Head over to my profile for my contact information if you are interested in learning more.

Hi John, WOW thank you so much for sharing your research on the San Antonio market! I am an out of state investor actively looking to invest in San Antonio. Your research significantly assist me. I'll run the zip codes past the properties I have been looking at and see how I match up. Thanks again

@Rachel Steenland

Thanks for reading! I was wondering if anyone was going to read this because of the length.

If you want a second opinion on the properties you are looking at definitely let me know! 

I love how long and detailed it is! I will definitely reach out.

@Rachel Steenland

GREAT! It's not for everyone. I don't post a whole lot but I really like to make sure I give plenty of value when I reply.

I will probably try and post more information like this on BP

@John Barr You sum it up perfectly!  I 100% agree with your analysis and calculations and concur on the areas mentioned.  I am partial to the 78202 because I love older homes and love the gentrification but I also agree alot of speculative neighborhoods have activity.  I am also partial to the 78216 because it is so central.

Thanks for taking the time to write this :)

Arissa

Hey @Arissa Pedroza ! Thanks for the positive review! I didn't know how other people from San Antonio would respond to this analysis.

I do like 78216 as well because of its location. 

Great analysis @John Barr ! Thank you for sharing that. I completely agree with a lot of the analysis and wanted to add on about the Southside. I have feeling if Texas A&M continues with their plans for the campus, the area can develop to what UTSA did for the NW side of town.

@John Barr

Wow.  Fantastic post.  Can't upvote it enough.  Thanks for taking the time!

@John Barr , thanks for the insight.  I am new to the SA area and have used your info to set a up a few searches.  I will be at the Craft Brewed Real Estate meet up so maybe we can talk more then.

@Ronald Lou

That Campus is one of the things that I continue to watch to see if they can effectively become an economic stimulus. The difference with what UTSA had going for it as you had Valero, USAA, and now Security Service Federal Credit Union corporate headquarters in the same area.

Definitely something to watch.

Good analysis. Thanks John. 

@John Barr, WOW! This mirrors a lot of what I've read and the fact that other locals in SA agree allays many of my concerns.

I like your commentary as well, it's nuanced and realistic (sometimes missing from brokers...)

I will definitely PM you!

absolutely. This is somewhat of an untapped market and it appeals to a lot of people because there is an influx of military as well as future job growth and potential. I think San Antonio is poised to become what Austin and Houston are just about 5 years backwards which leaves investor the potential to move forward and make that happen

Arissa

@Arissa Pedroza  That is my impression as well...and it is great to get confirmation from someone in the area.  

@John Barr Thank you for your investigation, What is the price range of the properties in these zip codes?

I am about 6-8months away from purchasing my first investment property/house hack in the San Antonio area. Currently I live and work in New Braunfels, and I haven’t had any luck finding property that will work for me in this area. I’m looking for a duplex that will cash flow when I move out, appreciation would also be a great bonus. Thanks a lot for this info and for taking the time to write such a great post !

Originally posted by @Chris M. :

I am about 6-8months away from purchasing my first investment property/house hack in the San Antonio area. Currently I live and work in New Braunfels, and I haven’t had any luck finding property that will work for me in this area. I’m looking for a duplex that will cash flow when I move out, appreciation would also be a great bonus. Thanks a lot for this info and for taking the time to write such a great post !

"House Hacking" is something every new investor would love to do. But, it's very hard in a hot market which is why you're not finding anything. We focus on cash flow but we have yet to find a decent multi that produces better returns than a SFR. The only house hacking I have seen people execute successfully is buying a good SFR and then renting out the other rooms in the house. The "tenants" will pay most of your mortgage if not all it.

Hope this helps, let me know if you have further questions.

Thanks for your response Jonatan, I will keep that in mind when I am looking an Investment in the area. 

Great post John. Curious what you think about the Verano land development, ~1800 acres surrounding Texas A&M. That land has been tied up in litigation for years which has since been resolved with plans to sell it off in the very near future.  Now the property can finally be developed with much needed student housing,  town center, single family residential, commercia, etc surrounding the University.

LOL. Here's what I know about San Antonio:

1. Everything is "steps from the Riverwalk." even if it's miles away.

2. The cops are jerks. The only speeding  ticket I ever received was on I-10 coming into San Antonio, even though other people were passing me at higher speeds before I was pulled over.

3. The Alamo will disappoint you. It's not all that.

But all kidding aside, San Antonio is a beautiful city full of history. The hills are beautiful, and they don't get the awful humidity we get in Houston. And the prices are still pretty reasonable there.

San Antonio always seems to get overlooked because of all the hoohah for Austin, and to a lesser extent, Dallas and Houston. But every time I see an article about the top 10 cities for growth, etc., San Antonio is on the list.

My opinion, for what's it's worth, is that San Antonio is probably the best place to invest in Texas, mainly because it has all the elements for growth, and everyone else is looking elsewhere.

Originally posted by @John Barr :

@Ronald Lou

That Campus is one of the things that I continue to watch to see if they can effectively become an economic stimulus. The difference with what UTSA had going for it as you had Valero, USAA, and now Security Service Federal Credit Union corporate headquarters in the same area.

Definitely something to watch.

Thank you so much for starting this thread! Not only was your post extremely informative, but the additional comments supporting yours are helpful as well. My husband and I are trying our best to wait and find the right first property for us. 

Wife and I just starting out on our REI journey and we've been scouring the SA market and looking for insights. This is an INCREDIBLE post!

Thank you so much for shooting this information out there.  

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