All Forum Posts by: Joseph Cacciapaglia

@Suresh Kannan there are plenty of property managers here in San Antonio that will do the leasing/tenant screening, but not require you to hire them for their ongoing PM services. They just charge for that service separately.

Sounds like a great deal. I find buying properties with troubled tenants is one of the best ways to find value in our market today. It's nice of you to share your contractor. It's so hard to find good ones here in San Antonio.

@Joey Tate it's hard to imagine that you'll be better off waiting. If rates go up a little bit, it could more than offset any future reduction in pricing. Unless there is a giant drop in prices in the future, you're better off buying with these extremely low rates, despite all the competition. If you look at historical pricing data, there is no reason to expect a huge decline anyway. So, by waiting you risk buying with higher rates and similar price levels. Depending on how long you're willing to wait, you could miss out on a lot of appreciation in the meantime. 

This is a great example of how many investors get too attached to cash flow to their own detriment. The fact that you're asking the question shows that you're too smart to fall into that "CoC above all else" trap. At your current level of cash flow, how long would it take for you to accumulate $75K? By my gorilla math, it's over 10 years. Why not take that cash now. Put a little extra in reserve, if it makes you feel more comfortable with the lower cash flow, and reinvest the rest. If you look at your return on equity, instead of cash flow, it will almost always make sense to pull cash out. Of course, you have to balance this fact with the additional risk you're taking with higher leverage. If you're still leaving a decent chunk of equity behind and holding reserves, I see very little downside.

I hear a lot of people complaining about how difficult it is to find deals in my market (San Antonio, TX). However, I have plenty of investor clients that have been able to buy multiple deals in the last several months. The difference between these two types of people is one group is looking for the same deal they could find 2 years ago, and the other group has identified the opportunities that exist today. I thought I’d take a minute to share what I see as the top opportunities in this market. I’d also like to hear what opportunities you see today.

Short-Term Rentals – A lot of my clients that had previously been traditional buy and hold investors have switched to a short-term rental model. This allows them to target a different price point, which in turn opens up a new world of opportunities. My average traditional rental investor typically needs to buy a home below $200K to “make the numbers work”, but my short-term rental investors often buy properties in the $300k-$600K range. In San Antonio, the competition at the higher price points is a bit less than in the traditional rental range.

Land for Ground-Up Construction – We have extremely limited supply of both existing homes and new construction, so some of my savvier clients have decided to start building their own projects. I made this switch late last year and am working on a couple of my own builds. Land deals are much easier to snag in this market than BRRRRs or flips, and I actually see the risk as being lower than the typical renovation project. However, there is still a lot that can go wrong, if you’re not diligent. Please keep in mind, this strategy does not include buying a new home from a builder. When you do that, they get the entreprenurial profit, not you.

Troubled Tenant Properties – Some of my best deals over the last 12 months came from landlords selling properties with a tenant that was causing some difficulty. In some cases, they weren’t allowing showings and in others they were behind on their rent. There is less demand for these types of properties, even though the problem is a temporary one.

Are you taking advantage of any of these opportunities today? Do you see different opportunities? I know there are plenty of other strategies that are working well today, so please share what you’re up to.

 Is that a recent change for SSFCU? I closed an investment deal with them with a 30 year loan late last year.

I like Lance Bryce at Thrive Mortgage. Feel free to message me, and I'll pass along his info. Some of my clients also use SSFCU, and they seem to have pretty good rates and terms as well. All of my investor clients have received 30 year terms with their investment deals this year.

Our vacation rental team has applied for 40+- type 2 permits in the last couple years. The process is pretty simple, as long as you don't violate the desity rules. You can look at the One Stop Map to see if there are other type 2 permits that are too close to your property. It's not perfect, because there could be other applications in the pipeline. On average it takes 2-3 weeks to have the permit issued, as long as you provide everything up front. Getting the floor plan drawn up is the most cumbersome part of the process.

Do you know what the property is currently zoned? Is it in a residential area, or is it retail, office, or industrial nearby? I have seen self storage facilities made up entirely of shipping containers. It seems like if it's big enough for several 20' containers, than you should be able to build something on it. I'm in the process of building on a 0.05 acres lot. It will be a tiny home, but I had originally planned for a shipping container home.

Are you planning on buying as an owner occupant or as a pure investment? As an owner occupant, there are lending programs that will let you put very little down, and $40K should be plenty. As a pure investment, you'll typically need 25% down, plus cash reserves after closing when buying multifamily. You may need to continue to save if it's the latter.