Investors!- Neighborhoods in San Antonio to avoid?

Question

So as I look more and more into San Antonio I realize that the site I
 am using "areavibes.com" does not rate very many San Antonio 
neighborhoods favorably. However, I have seen many inaccuracies 
from this website and I'm sure some of these areas aren't as bad as 
they're made out to be.

I would like to get some first hand knowledge from the BP family in the area!

-Which neighborhoods do you steer clear of no matter how good the deal appears to be?

-Where do you draw the line? From a technical standpoint is it a 
certain number of violent crimes per capita? From a personal standpoint 
is it the neighborhood having graffiti or houses in disrepair?

-What are you thoughts?

Thanks in advance everyone!

John Nichols

Christopher Campbell · Answer

Hey @John Nichols

I work strictly with investors here in town. This is going to come down to your own comfortability and criteria. I highly recommend getting out and exploring the areas that interest you. I'm a big proponent of doing your own homework so props for reaching out on this forum.

As I'm sure you're aware, San Antonio is a big city and growing very fast. Naturally there are established areas that are a little nicer, typically a little cleaner, and from what I can tell appreciation wise aren't growing as fast as the up and coming, typically less clean areas. The areas in transition are the best areas to look which typically means you'll see some run down houses in the neighborhood, maybe some graffiti, maybe the area shows a higher than average crime rate at the time, etc etc. I'd study what's happened to the Inner East Side for the previous decade to see where it's come from and what it was on it's way to becoming what it is now. It still has room to grow but it's the perfect example.

There's a give and a take in this business. You want lower prices, you may need to take on a heftier rehab or explore less established areas. But with this comes the potential for greater % appreciation and better cash flow. Greater risk = the potential for greater returns.

If you're okay with paying higher prices you'll get opportunities in better areas in better conditions. These well established areas are nearer to the top of the market and won't appreciate as fast. Since there's a higher amount of competition for these deals you'll have to pay up which will squeeze margins in some cases completely. They're stable, less work is required, but what's your end game? Less risk = lower returns. (Unless you're going to hold for a lifetime)

What I'm getting at is what is the main goal here? Are you going to hold forever? Are you parking your money? Do you want cash flow? Are you wanting to buy something that could double in value or more in a 5 year window? Can you mix it up?

I think even more importantly than this, if you're relying solely on secondhand area review sites you won't learn nearly as much as getting out and driving the areas that interest you. From there, at your discretion, you'll have a lot more confidence in approaching deals since you'll get your own eyes on the area.

There's a lot of gold in the "rougher" areas of town. I wouldn't completely shut them out. Just my personal opinion, speaking from experience. I'm interested to see what others say though.

Cheers!

Joseph Cacciapaglia · Answer

This is an interesting data driven approach. I'm worried that this type of analysis in the wrong hands will cause a lot of trouble though. I'm sure you're using this as your step 1 in your location analysis. However, I could imagine many new investors seeing something like this and thinking anything in the shaded area is good to go, and worse yet maybe that all the shaded areas are equally good to invest in. I'm sure you realize that's completely untrue. There are a lot of neighborhoods in those shaded areas where I wouldn't invest, because they're either too tough to attract tenants to or have greater turnover issues than other parts of town.

It also looks like this ignores some of the best neighborhoods for investing. I'm guessing that you're ruling out the A areas with this map too, maybe because in general it's tough to find deals there. However, there are pockets of more affordable homes in some of the A areas that do extremely well as investment properties. Some of my most successful investor clients focus on areas like that. It also rules out some pretty nice areas that happen to be located on the edge of zip codes that would otherwise be C areas.

I guess my general point is that zip code level analysis can be interesting, but isn't terribly effective for picking the best neighborhoods to invest in, or at least not here in San Antonio. I realize the appeal of using zip codes, because there is a ton of data at that level. I find a lot of the online tools have this same issue. They'll provide zip code average rental rates for properties that are in below average sections of the zip code. Unfortunately, San Antonio is much more nuanced than that, it I've seen these types of tools cause major problems for new investors.

Lee Ripma · Answer

@John Nichols

How about a way to only show what I call B class rental property locations?

• MSA (Metropolitan Statistical Area) with major airport within 50 miles 
• Population of at least 150k
• Minimum of 3k housing units
• Median home value between $100k-$250k
• Household income of $30k or greater
• Forecasted population growth rate greater than zero

Here is that map for San Antonio

Lee Ripma · Answer

@John Nichols - I created it. I’ve been more successful in B class areas than C class areas with rentals and when I wanted a new affordable market I made this for the whole US. Not easy but I’ve got the background to do it. I have a whole company around the quick location insights I wish I had when I started investing out of state!

John Nichols · Answer

Hey everyone thanks for all the positive responses and good advice! To preface my replies, I am observing from afar using a variety of online tools and my assumptions might not be totally accurate, so thank you so much to all you local experts for lending me your advice.

I really do like the look of the west side! However, I've been looking at the south/ south west side of town primarily at multi families. Hidden Cove/ Indian creek, Harlandale, South Southwest, and Tierra Linda to name a few. These areas seem to offer affordable prices for me as an amateur investor but I just want to make sure I'm not wasting valuable time analyzing an area that's largely stagnant.

I'm also using local Walmart's, HEB's, and Starbucks as my point of reference for population growth (or the lack thereof). This strategy seems to indicate the North West side of town is booming, however this kind of prices me out of the multi-family game over there so maybe some single family house hacks? This area looks to be 60/40 mix of old and new construction, so perhaps there are some older houses that I could add value to and capitalize on the location once finished.

As a rule of thumb I try to stay a little further away from the base just maybe a few miles. I thought perhaps the constant flyovers at either end of the runway might lower property value no matter what I do to it. That seems to be the case at the current base we're at anyways. I do see newer development on the due west side of town near Lackland, which makes me wonder if this development will keep moving downwards and perhaps the Southwest side will benefit?

@David Mares, I hope the above answered your question about what area I'm interested in. I know I'm all over the place but I tried to explain my process as best as possible, hopefully it's clear. Thanks for your suggestions!

@Christopher Campbell, You're an absolute gem Sir thanks for all of the advice you offered. Your questions are spot on as well. I'm trying to buy, and live in a multi family property using a VA loan. Then I'll transition to the BRRR method, though I'm not sure if my focus will be single family or multi-family. I want it to be multi-family but I'm prepared to transition to what the market has to offer. As for the area, I am trying to live within 30-45 minutes of either Lackland or Randolph AFB and then invest in the suitable area that I'm searching for now.

@Lee Ripma, your technical approach appeals to me in a big way! I love looking at hard data and statistics. Could I ask where you got this map? Also do you take into account new construction of major chain stores? If so how do you find new developments underway?

David Mares · Answer

It really depends on which pockets of town you are looking into - as others have said before on other threads one pocket/neighborhood in San Antonio can vary greatly to another nearby so having boots on the ground sure helps you get a better idea of your tolerance and the surroundings.

Where have you been looking specifically? I really like the far west and northwest side of town as I grew up and lived in these areas and know them really well - plus when I do start investing I like that it is an attractive option for active duty being relatively close to Lackland. @John Nichols

Caroline Gerardo · Answer

This answer is considered a crime in the US. Lookup redlining.

John Nichols · Answer

@Caroline

@Caroline Gerardo Hi there, yes sorry I probably should've specified that I mean buy and hold investors. Not lenders, that would violate the 1968 Fair Housing Act.

Investors!- Neighborhoods in San Antonio to avoid?

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