A San Antonio Story - My Investor's Newly Rehabbed Home

[Christopher Campbell]

Happy Day Ladies and Gents! I hope you're enjoying another day in paradise! 

We're still hovering a little over a month of inventory here in San Antonio, TX. Total sales are up YOY and active listings are WAYYYYYY down! Needless to say the retail side of things has been nuts as I'm sure the local realtors here will attest to. I wanted to share a story of a house one of my investors picked up that he's now currently living in with his family. I won't be sharing the specific details on this public forum to protect his privacy but I believe the elements of his story will ring true across the market and it really says a lot about the potential for fix/flip investors to adjust to see greater returns. 

I had this property back in August of 2020 when I showed it to him. It was an off-market deal at the time in a great location near Blanco and Bitters (North to Northwest part of San Antonio, 78232). It was priced at $230k and there were a lot of hungry buyers for it. At that time the numbers seemed pretty tight. Back then I thought it could only really comp out at about $365k, maybe a little more after repairs. My investor has a little experience and has a realtor in the family and they believed they'd get more for it but the house needed a lot of work - what I thought would likely shake out to $60-70k in rehab. I don't know the total amount that he put into the house but picture a 2800+ 2-story home with a pool that was all jacked up in the backyard and the foundation being 6" off in certain parts of the living area. SHEESH! It needed new HVAC systems, all the exterior love, new windows, and a full interior renovation - 4 beds, 2.5 baths, a full kitchen, and all the fixins. 

He finished up with the project a few months later and decided he loved the area and the house enough and wanted to take advantage of the extremely low interest rates and refinance after the 6-month seasoning period at a 2.8% rate (WHAAAA!?!?!) The house appraised at $405k in January. If you look at the comps in that subdivision today, I believe without a shadow of doubt that he could get it sold at $450k easily. He did a high quality rehab and the recent sales in the sub has rocketed values up like crazy! We're not even a full 9 months from when he purchased the property when we thought it comped out at $365k and now it comps out at $450k, almost a full $100k above my ARV call just 9 months ago.

He's looking to pick up another property and at the last house we walked he told me this story and I was blown away. He remarked about seeing the current market in a totally new light and adjusting his game to fit it with longer hold times that can turn into massive returns and lower capital gains tax when holding longer than a year. He believes that he could see great cash flow if he decided to rent it out which he plans to do in the future. It could be the area he's in, the quality of the rehab, or a case of being in the right place at the right time.

Flippers / investor-friendly realtors, are you seeing similar things happen with the properties you've purchased recently? I'm certain this is not an anomaly. What do you think of fix/flippers working to extend their hold times out a little longer to take advantage of this recent spike in valuations and drastic drop in DOMs? Looking forward to getting your thoughts!

Happy Hunting!