Real Estate Investment (San Antonio, Alamo, Alamo Heights: rentals, insurance, houses)

[gaohongwei]

I am thinking to buy a house in this city as investment.
Could someone give me some idea about the rental market, and the appreciation potential or some suggestion?

[firstclassflyer]

Just what we needed..more rentals!

[jules07]

Do alot of research before you consider it. I don't think that any Realtor who is worth their salt would recommend it. SA is flooded with rentals due to investors from out of state buying up properties to rent. As a general rule, we don't have double digit appreciation and that's what the investors were looking for.

Find a good property management company and get their imput as well. I was talking with a property manager yesterday. At least 5 of the homes she manages are for out of state investors who are losing a minimum of $1300 a month!

[ShaneSA]

I have numerous rentals that I bought as investment. They were run down and in very poor condition. Over time, I have improved them, manage them myself and am making money every month.
It's all in how you handle it and how you manage the property.
One thing I always do is drive by where the applicant is moving from and call the second previous landlord. The current landlord will say anything good to get rid of a bad tenant.
The second previous landlord will tell you the truth.
I have managed to keep tenents for years. I'm fair to them if they are fair to me. In 12 years of managing properties I have only evicted 2 people.
I never use a managment company, they do not keep a close eye on things.
It's all about the money to them.
The longest tenent I have currently is 7 years, the shortest is 2 years.
Rentals are not all bad...it's the landlord who is falling down.

[Paka]

I have to agree with the above post...we also manage our own rental (after a HORRIBLE EXPERIENCE WITH A MANAGEMENT COMPANY) and we have found that we do well with our tenent selection. We are lucky, our home is in the Med Ctr area and we have been very fortunate to have Med student families as renters.

I think the key is being here to manage your property...something out of state investors can not do. IF I were looking to go into the rental market, I would want something I could keep my eye on so close by. Just a thought.

[montevista1]

ok i invest a bit here and i do live out of state. #1 do not buy an sfr thats just plain dumb. 1 vacancy =100% vancany. I would advise 2-4units. My manager is excellent, but obviously the best manager would be the owner. Dont buy outside loop 410; too many rentals. Even inside 410 there are alot!

[Paka]

Originally Posted by montevista1

ok i invest a bit here and i do live out of state. #1 do not buy an sfr thats just plain dumb. 1 vacancy =100% vancany. I would advise 2-4units. My manager is excellent, but obviously the best manager would be the owner. Dont buy outside loop 410; too many rentals. Even inside 410 there are alot!

Good point and good advice about the multi units...but I do think that you are at a GREAT advantage because you know San Antonio so well...some of these folks that are "buying" in have never been here or have very limited knowledge of the city. It seems funny that folks will research and research buying a dishwasher or TV...but all want to buy into SA without much information as long as the "price is a steal" compaired to where they live currently.

I did a closing with an out of state investor who bought six properties in four days. I asked him where these houses were, and he shrugged his shoulders and said, "uh, in the suburbs I guess". He bought soley on price, had hired his agent as a property manager, and never planned to set foot here again. I would love to see how his properties are doing!

[golfgod]

I'm posting the following as someone who has owned rental property in TX, and other states, for 30 years.

Do a LOT of research before investing in TX (or anywhere for that matter), this is not a good state in which to own rentals.

The rule of thumb among landlords who KNOW WHAT THEY'RE DOING is that you need to have gross rents of TWO PERCENT of the cost of the property. I see lots of people (usually rookies who are losing their shirts) claiming "break even", or "slight positive cash flow". If your costs are $600/month and your rent is $800/month you won't be a landlord for long.

Many times people forget to include any allowance for:

Advertising
Vacancies
Property management, even if you do it yourself
Turnover make ready
Advertising
Repairs
Upkeep
Major maintenance
Lost rent

BTW, appreciation in TX is not going to exceed inflation. Despite what last year's article in (IIRC) Business Week said about "high appreciation in SAT. Take a housing inventory of a couple of thousand houses averaging $100K and build 200-300 new units at $500K and you'll have a statistical aberration that makes people thing there's high appreciation in home prices.

I know there are more than a couple of thousand homes in SA, but the construction has been well over 300 the last few years. Go back and look at the numbers in established neighborhoods and you'll see there is no long term extraordinary appreciation.

Also check and see how high the property tax will go when the Homestead Exemption goes away. Double check on the Fire and EC insurance.

Oh, and if the houses did happen to appreciate at a high rate, your property tax will shoot up because non-homesteaded houses have NO CAP on increases in property taxes.

Not to tout any other web sites but a google search will stear you to many sites dedicated to real estate investing where you can get lots of "grey haired advice" from more folks like me.

golfgod

[montevista1]

Ok.... I own several multifamily units in Alamo Heights and Monte Vista and I live out of state. If you put 20% down and buy at 10-11x gross rents it will most likely cash flow. . I only buy Monte Vista and Alamo Heights and my appreciation is excellent. I have absolutly no complaints!

I live in L.A. and most properties that are 2-4units require 30-40% down to cash flow and are roughly 4x as expensive as something comparable in San Antonio. I bought my first duplex with 40,000 down.... I am going to keep them at least 5-10yrs. I firmly believe in the potential of San Antonio.

Yes property taxes here are insane... but so is paying 1.3 million for a duplex in L.A. that brings in rents of 60,000 a year.