I screened 2,105 San Antonio listings against the 75% rule. Two cleared it.

Rehabbing & House Flipping
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I screened 2,105 San Antonio listings against the 75% rule. Two cleared it.

Steve Waller
Lender · Houston, TX · Member since 2026 · 65 posts · 6 votes

I do this every week in a different Texas market and post what comes back. This week was Bexar County.

The screen: every active single-family listing between $80,000 and $300,000, at least 1,000 sq ft, built 1950 to 2010. That is 2,105 listings. One test on each - purchase against 75% of ARV, less repairs, less closing costs. Then again at 70%, because that is where a first-timer actually funds.

ARV came from closed sales inside each property's own subdivision, held to +/-20% of the subject's square footage and +/-15 years of its vintage. Under three matched sales I report no ARV at all rather than a bad one. No ZIP averages.

Results:

44 fix/flip candidates carried forward, 25 with enough comps to value. Two clear at the seller's asking price at both 70% and 75%. Four more are within $20,000 of clearing at 75%.

The rental side was the surprise. 181 listings carry a Tenant Occupied disclosure. I comped the 32 cheapest per square foot; 22 had enough sales to value. Every single one misses at both advances. The closest is $53,625 short at 75%. Same answer I got on 325 of them in Harris County last week.

Three things I took away from it.

1. The widest spread on the board is not the best file. It had four comps and needs a finished value slightly above the best sale that street has produced in twelve months. The file I would actually buy has 48 matched closed sales behind it, has sat 120 days, and is about $7,000 short of the number. Sort by margin and those two land side by side looking identical.

2. A low price per square foot often just means the house is oversized for its street. Several of the cheapest per foot on the whole board fail by six figures, because the finished value their size implies is not what the subdivision pays.

3. My closing cost assumption was wrong and I had been carrying it as a percentage. Three percent on a $90,000 purchase is $2,700. Actual is closer to $10,000. A percentage understates worst at the small end, which is exactly where the thin deals are. Re-running the board on real numbers took one property from $3,447 of room at 70% down to $946.

The occupied-rental result is the one I keep chewing on. Two markets in a row, and not one tenant-in-place listing clears. The explanation I keep landing on is that a rented house is priced as a finished product - somebody already did the rehab, placed the tenant, and priced in the outcome.

For those of you buying occupied rentals off the MLS: are you getting them to pencil at list anywhere, or are you all buying them off market? And if you are getting them at list, what am I missing in how I am valuing them?

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  • Igor Ganapolsky
    Coral Springs, FL · Member since 2018 · 464 posts · 95 votes
    2w

    Great discipline on the comp set—especially separating subdivision-level matched sales from ZIP averages and correcting the small-balance closing-cost assumption. For occupied rentals, I’d underwrite the in-place rent and remaining lease/condition separately from the property’s flip value; if the seller is pricing it as a turnkey product, the spread usually disappears unless there’s a lease, management, or condition discount. I’d also stress-test taxes, insurance, vacancy/turnover, and a realistic capex reserve rather than forcing it to clear a flip rule. The file with 48 matched sales and 120 days on market sounds more actionable than the widest nominal margin.

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  • Steve Waller
    OP
    Lender · Houston, TX · Member since 2026 · 65 posts · 6 votes
    2w

    Fair correction, and you are right that I ran the wrong test on that half of the board. Putting a flip rule on a tenant-occupied house asks it to be cheap twice - once for the rehab somebody already did and once for the risk somebody already took off the table.

    What moved me: the gap on the closest one was $53,625. That is not noise, and it is not far off what a rehab plus a placement actually costs in that price band. The seller is not mispricing it. He is charging for work that is finished.

    Where I still want to be careful is the lease itself. On the long-term side coverage is the number, and an in-place rent set two or three years ago can sit under market by enough to sink coverage while looking like a clean file. I would rather see a below-market lease with a near-term expiration than a strong one with two years left, which is backwards from how most buyers read it.

    Taxes are the other one you named, and in Texas it is the one that moves most. A non-homestead reassessment after a sale can land well past whatever the seller has been paying.

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  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    2w

    Interesting process.

    One the one hand, it's pretty well thought out.

    On the other, asking price should have NOTHING to do with an investor's offer price.

    That being said, an investor's chances of getting an offer accepted at 50% of asking price is EXTREMELY low!

    So, how can you tweak your process to better ID motivated sellers?
    - DOM is one way.

    Also, regarding tenant-occupied listings, 95%+ of agents, even most that claim to be "investor-friendly", have the WRONG approach to doing their CMAs🙃

    Typically, a buyer that intends to buy a property to owner-occupy is really buying a "home".

    "Home" is purely an emotional concept and is nothing tangible!

    So, the buyer only considers if they can afford the payment.

    Buyers do NOT really worry about value or rent appreciation, neighborhood vacancy rates, etc.

    An investor on the other hand, should be emotionless and solely analytical and only offer a price that makes their ROI target work - which is typically BELOW the asking price.

    So, agents doing a CMA for a tenant-occupied property should only be using comparables of tenant-occupied sales🤩

    NOTE: this is mostly a problem for single-unit properties. 2-4 unit properties, due to low numbers being owner-occupied and even those few buyers having to take into account rent for the other unit(s) to qualify for a mortgage, pricing takes care of itself.

    [email protected]248-209-6824
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    • Steve Waller
      OP
      Lender · Houston, TX · Member since 2026 · 65 posts · 6 votes
      2w

      Drew, you are right that the asking price should not set the offer, and I would take it further: the asking price is the only number in the file that can move. That is why I test against it. The output is not "this deal works," it is the size of the gap a negotiation has to close. On that board the median was 43% and the closest was 15.3% over. A 15% conversation happens. A 43% one does not, and knowing which is which before I pick up the phone is the point of running all 2,105.

      On motivated sellers, DOM is the one I use and it is weak on its own - a stale listing is often just overpriced by a seller who is not moving. The ones that actually predict: a tax mailing address in another state, a long hold with no lien recorded since purchase, an estate or trust in the seller name, and a lease expiring in the next ninety days on an occupied file. Those show up in the record before they show up in the price.

      Your CMA point is the one I have to sit with, because I made that exact error. My subdivision comps do not separate tenant-occupied sales from owner-occupied ones. MLS does not flag it cleanly on solds, so doing it right means reading remarks on every closed sale, and on 391 closed sales I did not. If occupied comps trade below owner-occupied comps on the same street, my ARVs on the rental half of the board are high and the gap I reported is understated. I am running it that way on the next county to see how far apart the two comp sets actually are.

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  • Deborah Wodell
    Lender · Sanford, NC · Member since 2024 · 347 posts · 116 votes
    1w

    This is really interesting, especially the point about occupied rentals being priced like a finished product. I’ve noticed something similar where the numbers can look good at first, but once you account for the actual costs, there’s not much room left.

    I also like your point about looking beyond price per square foot. A low $/sq ft doesn’t necessarily mean it’s a good deal if the neighborhood doesn’t support that finished value.

    Curious to see what others are finding with occupied rentals as well.

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  • Steve Waller
    OP
    Lender · Houston, TX · Member since 2026 · 65 posts · 6 votes
    1w

    Deborah, thanks. The occupied rentals were where most of the list fell out. The seller has usually priced in the finished product and the lease together, so the buyer pays retail for the house and still carries the turnover, the make-ready and whatever deferred condition the tenant has been living with. Once those go in at cost, the spread is gone.

    On price per foot, agreed. A low number only means something when there are matched sales inside the same subdivision supporting the finished value. Where there weren't, I dropped the file rather than borrow comps from the neighborhood next door.

    The full report is on my website, which you can find through my profile, and investors can sign up there to get new reports by email.

    Lender to lender: when an occupied rental comes to you as a flip, do you size it off the finished value or off the as-is with the tenant in place?

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  • Alyssa MarquezBusiness Member
    Real Estate Agent · San Antonio TX / Fort Lauderdale, FL · Member since 2023 · 117 posts · 26 votes
    1w

    And that actually makes quite a bit of sense. Once a property has a tenant in it and is cash-flowing, the seller is typically pricing it more as a finished investment rather than a value-add deal. I'd probably approach that a little differently and just focus on the actual rent, expense, and cash-flow numbers rather than knowing that you'll likely need that same 70-75% ARV number that would come from a flip.

    If you're specifically looking for that larger amount of equity, I'd imagine that more of those will come from off-market, motivated sellers.

    Interesting that you're seeing the same thing in both Harris and Bexar.

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  • Steve Waller
    OP
    Lender · Houston, TX · Member since 2026 · 65 posts · 6 votes
    5d

    Alyssa, agreed. A tenanted house gets priced as a finished investment, so running it through a flip test mostly tells you the seller isn't selling a flip.

    Where I'd push a little is on judging it by rent, expenses and cash flow alone. Those are the right inputs, but the seller's version of them is usually scheduled rent and last year's tax bill. Once the tax line is underwritten at the purchase price and insurance is a bound quote instead of an estimate, a lot of listings that looked like they cash flowed stop covering the debt. Same answer, reached from the income side.

    On off-market, I think you're right that the equity lives there. The catch is that the most motivated sellers often have the messiest files: deferred maintenance, a tenant with no payment ledger, a title issue. The discount is paying for that work.

    The full report is on my website, which you can find through my profile, and investors can sign up there to get new reports by email.

    From the agent side in San Antonio: when a tenanted rental does trade near a price that works, what did the seller have going on that made them take it?

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