All Forum Posts by: Jeff Wells

I have used Self Directed IRA Services out of Waco. I wouldn't recommend these folks. They got the job done, but not very user friendly. Also, very difficult to speak to a real person.

A lot of this has to do with the oil downturn.  There is always an accordion effect, so the overall Texas economy is really feeling the effects now from the oil downturn of the past few years.  Depending on how bearish or bullish you feel about oil over the next 5 years, I think that will determine whether Texas continues to see large, dramatic growth, or slower, consistent growth.  Each city in Texas has other economic drivers (For example, San Antonio = military, biomed, tourism, etc) that drive our economies, however Houston is very oil-centric, so we are definitely exercising caution there.

@Ruben Galindo, you hit the nail on the head. It's the HOA fees that erode your profit margin with condos and town homes in San Antonio. Especially in the Medical Center area you can find great deals ($100-$110k) that command higher rents ($1,000+ per month), BUT when you factor in the HOA fees which are often several hundred dollars per month, the numbers don't look good. Also, your investment won't appreciate like a single family home, because you don't own the actual real estate (well, technically you do with a town home but you know what I mean). Condos and town homes are tempting in San Antonio but they just don't have the income-generating or investment potential of a SFH.

@Seth Teel, that is awesome info...what a great post!  Many thanks for sharing!

Chris, welcome!!!!

Seth, it's not downtown.  It's in the I10/1604 corridor.

Thank you all.  Makes perfect sense.  As for why to sell, we own lots of vacation rentals in different areas (we just haven't sold any of them), and this is not one of the higher performing ones.  It still turns a pretty solid profit, but not compared to others, and quite frankly, we are putting together cash for a commercial investment with a higher return.

I have explored the forum posts regarding vacation rentals, and I haven't seen this exact topic addressed (unless I missed it), so I wanted to ask for feedback on this particular property.  We have a vacation rental in San Antonio, and the numbers look something like this:

Market Value of the Property By Itself:  $166,000

Value of Furnishings, Appliances, Etc:  $17,000

Net Income for 2015:  $21,000 (converted to a short-term rental in March of last year)

We have accumulated a great portfolio of reviews, etc, but we're are looking to utilize the proceeds from the sale of this rental to re-invest in a commercial property.  I was curious to hear your feedback on how we should value/price this property?  Should we evaluate more as a business, or what would you recommend? 

Thank you in advance for your feedback!

Completely agree with the pro-agent philosophy.  The area around Randolph AFB can be tricky in terms of location.  Most areas cash flow pretty well, but there are some areas that look attractive on paper and seem okay with the visual test, but the areas are actually headed in the wrong direction and property values/rent are decreasing due to crime in the area, etc.  Having a realtor that really knows that part of town is very important.  Also, on the negotiating side, it's a seller's market, so having a buying agent helps even the playing field (and the option period helps too if it applies to your deal!).

As stated above, interview a few realtors that specialize in investment properties, and pick the one that fits your needs the best.  Also as stated above, if you're buying with cash, that changes things just a bit.

One of the most well-stated summaries of the Texas real estate market ever!  Gonz, that was well-said!  To me, Houston will be the tough spot in Texas for the next few years.  It's so oil-dependent, a short-term crash may be inevitable as Gonz said.  You all know how the cuts work during oil slumps.  First, the contractors, then the field workers, then they work their way up the chain.  Once they start cutting the upper-level executive ranks, things are bad, and not getting better in the short-term.  That's what seems to be happening right now.  Normally during real estate downturns, rental rates stay fairly consistent or increase (as people can't obtain financing, lose their homes, etc).  In Houston's case, vacancy rates are rising, and home values are starting to fall.  It's the perfect storm for a mini-slump.  Of course, all is well in the world if oil works its way back up, but all indications point to cheap oil for a while.

As for Austin, as a general rule of thumb, any time real estate appreciation rates are WAY out of whack with wage appreciation rates, it's cause for concern.  That has been happening for a while now, but Austin is defying logic so far.  I said the same thing last year, and wished we would have invested more money there the past couple years, so who knows!

San Antonio is where the majority of our clients are investing right now, although Austin is still popular for obvious reasons.  We don't invest in the DFW market, but it's a great one!