Questions about the SA Market

[Elisha Johnston]

Hi everyone! Just started my first W-2 job out of college and getting into real estate. Currently living in Los Angeles but I visited San Antonio for the first time in many years, and it definitely seems much more lively and developing than many other places I've been to. I also just did a brief search and found some pretty good deals in terms of cash flow. How has everyone else's experiences been in San Antonio? I'm currently looking at investing in Cleveland where you can get up to 30%+ COC returns, and a bit into Columbus OH where appreciation is big as well. I'd love to consider investing in San Antonio if there is similar cash flow! Also curious about cost of entry into the market.

[Travis Timmons]

Your underwriting is off at 30% CoC. Real estate is a pretty efficient asset class. If 30% returns were available, they'd be gobbled up immediately.

As for San Antonio, I lived in Texas for a dozen years and spent a few days per month in San Antonio for work for a good chunk of that. It is growing and has an incredible job market; it is also pretty run down in many sections of the city. If you're looking to buy a cheap property there, be very careful. 

Investing out of state is hard, but not impossible. My advice would be to buy something where you can rent to a better class of tenant. Someone with a 700 credit score and good job. I am also of the belief that if a property cannot produce $1500-2000+ in rent per month, you're just going to have a hard time covering capex. A roof, HVAC, and foundation on a $80k house cost the same as a roof on a 250k house (assuming a similar size but better location) with a similar PITI to rent spread.