What qualities should I look for in a SFH?

Question

Evening everyone,

In May I plan on purchasing my home. I plan on it being a SFH and having it be my primary residence. Any additional rooms I have I will most likely rent out.

With that idea in mind, I am more inclined to purchase a larger house with more bedrooms or bathrooms. However in San Antonio, there doesn't seem to be many 4 bedroom 2 bathrooms available so options are limited and in most cases are expensive as well.

My question is, is there a trade off between the two? I realize I would have to manage more tenants/ roommates but other than that, economies of scale tells me I could get a better return from a house with more bedrooms.

Aside from that, are there any other qualities I should look for in a house other than personal preferences?

Thanks,

Logan

Brian Phelt · Answer

You can still find homes along the IH-10 corridor between 410-and 1604.  They will be older but they are nice homes.

If you are staying in the area you mentioned then I see no issue with your plan.  Anything you can do to increase the value of an investment is a good idea.

Logan J. · Answer

Thanks Brian for you input. I really appreciate it. I like to see locals on here for sure. Most people don't know what they are missing out on.

Logan J. · Answer

I grew up on the northwest side and although I enjoy the area, I don't think I want to buy there. I would prefer something along i10 and/or west of i10 mainly because it is closer to work for me.

What are your opinions on live-and-flip homes? That is, for the most part, what I plan to do. I have a good idea of the neighborhoods in town but would like to hear your opinion.

Brian Phelt · Answer

Logan,

For the loan amount you have mentioned I think you could score something in the northwest (Culebra-/Bandera) from Loop 410-Loop 1604.  And also in the northeast.  I am working with several buyers with similar budgets.

As for your other question, as a professional I would always advise you work with an agent when doing a real estate transaction.  You could always get an agent to represent you in doing the paperwork, or work with an attorney to draw up documents.

Logan J. · Answer

Brian, I've got a bonus question.

If I was interested in approaching a seller from a craigslist ad how might I finance the deal? Is it as straight forward as confirming they want to sell and then going through a loan officer to get the financing and closing on the deal? Would I even need a real estate agent at that point?

Logan J. · Answer

Thanks for the response Ross. If I were to buy a 4 bedroom house I have realized I need at minimum 2 full bathrooms and a half, assuming one of the bathrooms is in the master bedroom.

Assuming that I can find a simliair price between a 4/2.5 and a 3/2, It would make more sense to go with the 4/2.5 since it has the opportunity to cash flow more.

Logan J. · Answer

That's good to hear. I think I may only be holding for 3-5 years so If I can get a property in the South Town / Pearl area, It might be ideal. However, I don't know the market for tenants is in that area. I know that I could find students from UTSA if I bought a place closer to 1604 and i10.

I've done some rough math and assuming I can bring in ~500 per room, I can't really spend more than 165K on a home to cash flow. I don't think I could buy a home in the Pearl or Southtown area for less unless I am looking at the wrong zip codes.

Ross Denman · Answer

I think extra bathrooms are important. There will likely be several people who will have to get ready at similar times of days. Not having enough showers, sinks, or mirrors is a huge inconvenience to the tenants. While I agree that bedrooms make more since as you can have more roommates, but if the home is overly inconvenient, they may not stay long and you may lose the extra potential in excessive vacancy.

Your economies of scale are not including vacancies. If you have 2 out of 3 bedrooms vacant for months at a time, but you could keep 2 bedrooms rented most of the time, it ends up being the very similar income, but the 2 bedrooms become less headaches. I'm saying that I'm right, it's just something to take into consideration.

We manage SFH homes in Indianapolis and I've seen the numbers. Our homes with at least 1.5 bathrooms stay rented for an average of 1.5 years longer than the 1 bedroom homes. Small families outgrow 1 bathroom relatively quickly. It may not be a fair comparison to a roommate situation though.

Brian Phelt · Answer

All the areas you listed are nice.  Pearl and SouthTown are up and coming, so it will become more expensive to buy there as development continues.  Regarding the roofs, most of the hail issues were concentrated on the NW side, and roofers have been working non-stop to make repairs.  Whenever you start looking at homes, the sellers disclosure will usually list if the roof has been replaced recently.  You will also have an inspection done on whatever home you decide to purchase, so that will also let you know about any potential issues before you buy.

What qualities should I look for in a SFH?

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