Underwriting a 10–15% Location Discount (Train Tracks + Drainage Ditch) SA,TX
Hey BiggerPockets Community,
I’m underwriting a single-family off-market deal in Northwest San Antonio (78249 zip code, Northside ISD) and would love to get input from local TX investors and experienced flippers on how you discount for specific site nuisances.
The Property Profile
Layout: 3 Bed / 2.5 Bath | 1,252 SF | Built in 1975
Lot Size: ~0.32 Acres (Unusually large lot for this specific subdivision)
Schools: Strong Northside ISD ratings (Elementary 7/10, Middle 7/10, High School 6/10)
Condition: Full gut rehab needed (deferred maintenance, abandoned plumbing leak remediation, siding replacement, full interior remodel, fence).
The Two Site & Location Hazards
Rear Freight Train Tracks: The back alley directly borders an active freight rail line.
Left Drainage Ditch: Municipal storm runoff ditch runs along the left lot line. (Verified FEMA Zone X — minimal flood hazard, so no mandatory flood insurance required).
The ARV & Discount Logic
Subdivision comps without location defects put pristine 3/2.5 turnkeys in the $250,000 range.
Because of the tracks and drainage ditch, I’m discounting the After Repair Value by 10% to 15%, which brings the realistic resale baseline down to ~$225,000 (matching the current tax assessment valuation of $229,780).
My thought process is that the massive 0.32-acre lot gives a great buffer, and double-pane vinyl windows + 6ft cedar fencing will mitigate acoustic issues, but the discount is necessary to account for a slightly reduced buyer pool.
Underwriting Breakdown:
Target Resale / Baseline ARV: $229,780
70% Buy Box Target: $160,846
Estimated Rehab Budget (Investor Rates): $65,000 ($51/SF heavy gut, mechanicals, siding, LVP, kitchen/baths, fence)
All-In Purchase Target: $95,846
Projected Gross Margin / Equity: ~$68,900
Alternative Exit (Rental): Projecting $1,850–$1,950/mo rent (UTSA / USAA corridor demand).
Questions for the Pros:
Discount Rate: Is 10–15% sufficient off top-of-market comps for rear rail line exposure in 78249, or would you hit it harder in today's market?
Buyer Perception: For those flipping near rail lines in SA, have double-pane windows and privacy fencing been enough to move the property smoothly at the discounted ARV?
Rehab Estimate: Does $65k sound realistic for a 1,250 SF heavy cosmetic + siding + mechanical rehab using local sub crews?
She accepted $90,000 which sounds high to me.
Appreciate any insights or feedback from the local San Antonio market!
