All Forum Posts by: Seth Teel

We'll be hosting our first MeetUp of 2018 on February 6th, 6pm @ Joe Blue's (1420 S Alamo St, San Antonio, TX 78210). This month we have Guy Gimenez of Buying Texas Today as our guest speaker. Guy will be speaking on "Relational Capital" and building better relationships in the real estate industry (think partners, capital investors, co-wholesalers, joint venture, etc). Guy is former police officer and helicopter pilot turned real estate investor and broker. He's held a license since 1999 and has been investing since 2000. He buys property all over South Texas from Austin to Corpus, and even Houston. We are honored to have him join us this month and hope you can join us too!

As always, bring your listings & wholesale deals for pitching. All are welcome!

There is no cost for this event.

Sponsored by: Somos Real Estate & Texas Quest Capital  

@Sterling Williams  Turnkey, I suppose?  Have couple clients looking in that area.  Please send info my way: [email protected].  Thanks.

@CP Chou 

What type of questions do you have? Currently STRs are not regulated.  Over the last year the City has developed a draft ordinance (click here to view).  Since the beginning of the year, the City staff has presented this to each city board (Planning, HDRC, Board of Adjustment, etc.), gaining support for the ordinance and taking note of requested amendments and changes.  The ordinance, with amendments, is to be presented to the City Council in the next couple of weeks.  It is very likely it will pass.  If this passes, current STRs that are current on their Hotel Occupancy Tax (HOT) will be grandfathered in.  New STRs will be divided into two categories: Type 1 STRs = Owner Occupied or Owner on Premises; Type 2 STRs will = absentee landlord.  There is significantly more regulation on the Type 2 STRs.  Feel free to read through the draft ordinance and shoot me any questions.

If you questions more pertain to good areas to buy and STRs, I can help with that too.  Several of my clients use this investment strategy.  

@Kevin Castaneda 90 - 95% of the time we rebuild the existing windows.  The labor cost aren't astronomical, we average less than $300/window when restoring them.  Most new windows installed are $350+ per window.  As @Rick Pozos mentioned several areas in town (historic districts & conservation districts), require you to keep the existing wood windows.   We only replace wood windows with newer windows if: 1) the majority of windows are degraded to a point that labor costs would be high, 2) It's not in a historic district, and meets criteria of #1, 3) When metal fame windows has been installed (typically aluminum), we always replace these as they tend to function poorly.  

On re-sale, new windows are definitely a "plus" for buyers, even in historic districts.  

A couple other items to consider are Context and how the new window will be installed.  There are certain homes that will look terrible if you replace historically accurate wood windows with cheap vinyl ones.  Context is everything, and sometimes window replacement takes and otherwise great renovation and makes it an eyesore.  This can sometimes be mitigated by removing the fins from the new window and recessing the window into wall cavity given a reveal and more "historic" look.  Simply installing the new widow flush with the siding definitely will look out of place.  

Ultimately the decision is based on a combination of what the city allows your to do, desired aesthetic, and your budget.

@Kevin Castaneda  

We do a lot of historic and historic era renovations, all of which have the wood lap in the walls.  We typically leave as much in place as possible.  We remove any boards that are severely degraded by water or termite damage.  The remaining boards are cleaned up (nails & screws removed, cleaned, and address any protrusions).  As for insulation, there a few ways we tackle it:

• Remove lap boards (some or all) install batt insulation, replace lap boards if desired.
• Remove top lap board (or drill holes) and blow-in insulation
• If you plan to re-do the siding on the exterior of the house, we have pulled the siding and installed batt insulation from the exterior of the home, leaving the lap boards up on the inside, then siding the exterior. 

The conventional wisdom is to leave the lap boards (if you can). It ads stability to the structure giving the hope a much sturdier feel.  From my experience (both in personal homes & with clients), access to the wall for plumbing or electrical maintenance is usually not an issue. We do full re-wires, and all new plumbing in our renovations, so I am sure that cuts down on maintenance issues. But even when we've had an issue where we needed wall access, it's nothing drywall saw and/or Sawzall can can't cover.  

Hope this helps.  If you have any questions, shoot me an email or a call. 

I am not going to recommend any cities, as you can be a successful real estate investor almost anywhere. Of course it helps to be in a metropolitan area.  These statements aside, I want to bring up a few items most folks haven't mentioned.  When relocating, look at how the state and local laws will affect your business.  

• Is there a State Income tax?
• Is there a different tax for small businesses?
• Is there a City income tax?
• Do they have a Short-term rental (STR) ordinance?
• Is there a hotel tax on STRs?
• Does the State favor tenants over landlords
• How does the local market affect insurance rates (first home, investment property, auto, etc.)
• Does the City have rental occupancy regulations/inspections?
• Are there incentives for residential rehabilitation (State/Local Historic Reno Tax Credits, Low-Income Tax Credits, Grant programs, Development zones)
• Is it a pro-Union area? - This will affect renovation/repair costs. 
• What's the median home price. - Think of this relative to your current income. 

There are a ton of other questions to ask.  I would identify a few cities for a short-list, then reach out to key investors and realtor in that area that know it well.  Take a trip to these cities, meet with these contacts, and whittle down to one city.  Consult a your CPA before hand, set up your entity, and you can likely write off a lot of these "discovery" expenses.  

Good luck!

@Betty Cruz  If they were chopped up into multiple units prior to the City of San Antonio's adoption of the new Unified Development Code (UDC) in 2001 which re-zoned the entire city, they are likely "grandfathered" in and are considered "legal but non-conforming."  The burden of proof for this falls on the property owner, not the City, and the City can choose to except or deny your proof, should an issue arise.   

For those properties illegally, converted after the adoption of the UDC, they are considered in violation and non-conforming.  Technically illegal, but they aren't going to file criminal charges or anything, however City Code Compliance and Zoning can issue violations, which can result in fines, hearings, and ultimately court dates and even condemnation.  

Not to fear, though, you can always request a variance, special exception, or zoning change for the subject property.  A zoning change is best because it stays with the property after the sale; variances and special exceptions can sunset or terminate with the sale of the property.   CoSA Development Services has some really great people and they are happy to advise on your best option and they are willing to work with you to get your desired outcome.  That being said, zoning changes and variances are reviewed by boards appointed by the City Council and there is no guarantee the board or dissenting constituents/neighbors will agree with your request.  

Now on the financing.  If you pay cash for a non-conforming property and don't plan to refinance, you're fine.  However if you finance (Hard Money or Conventional) the purchase or plan a cash-out refinance, you may run into underwriting issues.  

Scenario: You may have a 4 plex, located in an R-4 zoning (Residential Single-family up to 4 units per acre) which does not allow for multifamily properties (RM-4 zoning or higher would be required).  Your lender's underwriter may disqualify the loan due to the improper zoning.  Often times, property owners think they are fine because BCAD says "Duplex" or "Multi-Family Use," but BCAD does not control zoning or land-use and although the Use may be correct, the City zoning may not be.  I have had clients run into these issues from time to time.  

One last item to mention.  If the property has been chopped up into more than 5 units, this may also preclude you from obtaining your desired financing as 5 units or more is considered commercial property. Additionally, the City requires fire suppression systems (FPS) for properties with more than 5 units.   FPS is extremely expensive and can turn a great investment into a costly liability.

Understanding proper zoning and land-use prior to purchasing a multi-family property is paramount to a successful investment.  

@Account Closed reach out anytime with questions.  We get a lot of off market properties, both pocket listings and wholesale.  We'd be happy to work with you and your agent to see if we can help find you a deal.  

@Steven Gillmer I suspect you are limiting your search to a specific area? This may be keeping you from getting the cash flow numbers you are looking for. Maybe broaden your search area. Also, is you Realtor providing off-market properties or just stuff on the MLS?

We consistently help our clients find cash flowing properties with a minimum of $300/month in net cash flow.  The deals are definitely out there, even in this seller's market.

@Jason Brown Welcome back!  When, y'all get down here, reach out.  I'd love to grab lunch or coffee and see how we can benefit each other.  If nothing else, it's always good to network with new folks.  Have a great weekend.