Which San Antonio Neighborhoods are better for SFH?

Question

Hello!

I've been listening to BP for almost a year now and inching closer to purchasing my first investment property. I've been looking in the San Antonio area and would love any insights you may have about this market.

Specifically, I'd also be interested in your feedback regarding the Laurel Mountain Ranch community vs. Helotes community.

I've been working with a realtor there and everything I'm hearing sounds great but I really want to make sure I do my due diligence before I purchase anything.

Any and all feedback is very much appreciated! :)

Michael Guzik · Answer

Hey Elizabeth welcome to BP and congrats on looking into REI. My opinion being a San Antonian my whole life is that you need someone you trust with your life and valuable money in order to invest here. There are soooooo many places that look great but they aren't a renters market. Helotes is full of "rich white people" which is the stereotype that people think of when they think Helotes. It has more of a small town feel and there are very few apartment communities and duplex's there and I believe it's because there is not a rental market. Most of the people that live there can afford the ridiculous house prices and are upper middle class so they would only rent just for the fun of it really. I live pretty close to the LMR area and that would be a much better area to look into in my opinion. It's still developing and is filled with young couples and military families who would be your ideal renters. Make sure you really understand the market and area because that is key, you go 5 miles from the LMR area and you are in a not so nice part of town. The places to look IMO are UTSA LA Cantera area, the sea world area, Alamo Heights/Broadway area, LMR and Alamo Ranch area. Just be careful and really do your due diligence because lot's of houses cost north of 200k and only rent for 1200-1400 so really try and focus on the 1% rule. I'm not going to lie a lot of people around here think California investors are ignorant and usually laugh at them saying "you can tell that was a California investor" because most overpay and don't maintain the property. Just be careful and make sure you find a great management company/PM or someone you really trust. Good luck!

Brad Larsen · Answer

@Elizabeth A'Neals  There are couple of points here you need to consider with your question and some areas of concern.

1) You are working with a Realtor.  Good news there.  Are they advising you on what makes a good rental property because the home looks "cute" and has "good schools".....or are they presenting you with a cash flow analysis worksheet containing projected rental income that you would need to make a business decision?

It's a good question to ask because we as a management company have seen this time and time again.  We ask the investor WHY they bought the home they did to turn it into a rental home and they tell them their Realtor said it was in a good area.  Really???

Example:  One CALI investor bought two duplexes.  The POS Realtor told them they would rent for $1,200 a month.  As brand new units, we were lucky to get $1,050.  A year later they were getting $950 because the neighborhood was full of rentals.  That POS Realtor was long gone and made their $10k in commission.....but we were stuck with picking up all the pieces - finishing their job - and having to coach an owner into reality.

2) The average Realtor has no idea how rental property pricing works, what attracts tenants, how to screen tenants, and how to sell investment properties.  That's OK - just know what you are getting into.  The other one is "good schools".  Well, that's a bit difficult to quantify as a lot of it has to do with political scoring and public perception.  "Good" is in the eye of the beholder.

RECOMMENDATION and ALTERNATIVE IDEA:  We offer Package Investments and Cash Flow Analysis buying when assisting an investor in buying a home.

- Package Investment - Is where an owner already working with us in our inventory of near 800 single family homes says they are ready to sell.  Rather than put that on the MLS when the time is due, we present that as an off market listing to our investor pool.  It has reduced commissions, it's less than retail, no off market time for the seller, and the investor (buyer) already has a tenant with a lease agreement and property management in place.  The only hook to that is we have to manage the home.  That's fair right?

If you are interested in something like this - Ask your Realtor if they provide these two things.  If not, there are certainly other opportunities out there.  Feel free to contact us.

Good luck out there!

Will Pritchett · Answer

I have one in Laurel Mountain Ranch and it rents fast!  It happens to be one of the smaller ones and I'm not sure if I would pay full price (market value) and make any money or not.  I like no city taxes in that neighborhood (yet).  Agree that Helotes is not a great rental area.  LMR is a small area of our city though.  I'd look a bit wider.  Good luck!

Mike Taddy · Answer

Something to consider if you’re buying off the MLS, SA has a huge military presence.  Due to the increased “Summer move cycle” the market heats up quite a bit beginning in March and many places in the suburbs of SA will go at or above asking prices.  Another thing I noticed when buying and selling there, if you’re not used to negotiating/splitting closing costs, get smart on it.  I came from a place where it was unheard of buyers paying sellers Closing. Near SA it was standard to see.

The East/NE part along I-35 and North parts near 281 and 1604 are exploding. As mentioned, the North has a great school district.  The Schertz/Cibolo School district is highly sought after as well. I found that you will pay to be in these areas, but the rents are requisite with this demand.

Looking back, I personally wouldn’t buy off the MLS again anytime from April - July.  I can’t stress enough the influence of the military change cycle.  The benefit of the military presence is stable rent payments and collection. High character tenants.

I’m watching this market closely.  I’m interested to see just how much it can continue to explode.  Housing communities and associated retails are going up everywhere.  Many suggest its just a matter of time until SA is “connected” to Austin.  I think anything near I35 on the east side will continue to grow due to proximity of Austin.

To summarize growing areas I’m familiar with:

North SA

Schertz

Cibolo

New Braunfels (On way to Austin)

Will Pritchett · Answer

@Elizabeth A'Neals Both of those numbers seem realistic.  I don't use Rentometer but some do with good results.  I even find the MLS numbers to be off on rents sometimes.  Remember that these may only include those properties that are listed on MLS for rent and there are many people that just use Craigslist and a sign in the yard.  I would do a craigslist search in the neighborhood very regularly for homes for rent.  If you need to list it before you get good data, then start high and if you don't get any applications in a week or two, drop you price.  The market will tell you.

I also recommend timing the lease to expire in summer (we do June) as more people move when kids are out.  Also, some people will have kids that want to move here due to the school district.  This means you either do a five month lease with a clause that if all is well, you'll renew with no rent increase at that point for one year intervals, or you do a 17 month lease.  Just food for thought as we get much greater interest and speed or turnaround in summer months.

Congrats on moving forward and good luck!  Let me know if I can be of any assistance to you.  BTW, our house there is small (3,2) and we get 1300 a month.  We may have the smallest floorplan in the neighborhood.  Keep up the good work.

-Will

Betsy A'Neals · Answer

@Will Pritchett -- Hi Will, I'm happy to hear that. We very recently made an offer on a home in LMR and just learned it was accepted. We're already working with a property manager and have been checking CL/Rentometer/Zillow to gauge rents. Would you say those tools give a fairly accurate picture of what we could ask in rent. It's a 4/2.5 -- our PM estimated we could ask around $1,550 while I saw similar homes on Rentometer renting for up to $1,650. Does that seem accurate to you?

Betsy A'Neals · Answer

@Michael Guzik - thank you for the welcome and information! :)

As I spoke more with our realtor, she did share the same opinion about Helotes and LMR being a better option for us. We appreciate the reminder of the 1% rule -- we've been really fastidious about analyzing and re-analyzing the property on the BP rental property calculator. The numbers seem to work so I think we're going to go for it. We really hope not to fall into that cliche and take good care of the property. Thanks again!

Betsy A'Neals · Answer

Thank you, @miketaddy   -- your feedback is really helpful! The home we are looking at is along the 1604 and does seem to be in a great area-- about 10 minutes away from Alamo Ranch. Our realtor says the homes in the area rent out fairly quickly to military families and also said they make great tenants. I'll definitely be in touch, especially if we decide to work with a new realtor. Thanks again!

Mike Taddy · Answer

P.S. if you become interested in the areas I described, I have a close friend that is an incredible realtor I can refer you to.  He’s retired military with high character and integrity.   PM if interested.  And good luck...

Sharon Powell · Answer

Your question is a bit broad to answer.  Helotes is a technically a city on the northwest side of San Antonio, while Laurel Mountain Ranch is a community (neighborhood) more due west.  Both are in the Northside Independent School District, which is good.

Helotes is more established with continued growth, whereas the area around Laurel Mountain is still pretty fresh and under development.

Which San Antonio Neighborhoods are better for SFH?

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