Flipping vs Buy and Hold in San Antonio

[Nathan Williams]

Hey All!

I'm new to posting to the forums here. I am a newer investor living in Austin. I have done 6 deals in the past 2 years in Austin (4 flips, 2 buy and hold). As you are aware, the flip market has its opportunities and challenges. Low DOM and related seller advantages vs. extremely low inventory and crazy competition on the front side. Unless you are a cash or hard money buyer you could be facing a lot of difficulty. 

That being said, I wanted to explore the San Antonio market. From my research on the forums, San Antonio has been described as a "tricky" market. My understanding is that flipping can be difficult (higher DOM, low ROI etc.) but the cash flow for rentals is favorable. I have also read a lot about Section 8 strategies.

My questions to the community are:

1. Is my understanding correct with regard to flipping in SA? If I were to flip, which neighborhoods are in demand, or heating up? Surely there are some rough areas in SA. But the East Side of Austin was also very bad at one point. I'm curious to know the up and coming areas.

2. Regarding Buy and Hold / Rentals. Which neighborhoods do you prefer? I'm looking at more favorable tax areas, lower crime, decent schools, etc.

I will be touring San Antonio this Friday with a wholesaler. Hoping to educate myself further!

Thanks for your time!

Nathan

[Seth Teel]

@Nathan Williams

I don't see how San Antonio is any "trickier" than any market.  If you know a specific market, then you know where you can make money in that market.  Every city, suburb, area, etc, will have it's own nuances, so paying attention to people that make blanketed statements about a market just mean they don't know that market very well at all. 

Believing that San Antonio has higher DOMs and low ROIs is just not true. Or at very least is subjective. Yes, you can find areas where those statements are true, but it doesn't apply to the entire market or even the majority of it. Average DOM for April 2016 was 59, Average DOM YTD is 65. Sales were up 4% over April 2015 and up 8% YTD over 2015. Average sold price April 2016 $234.7K, YTD $229.9. These are solid numbers, but I've found in my flip projects I am routinely getting way better DOM & exceeding average sales price. I've netted between $90K to $100k on each of my last 3 flips with an ROI between 25% & 30%.

1. Is my understanding correct with regard to flipping in SA? If I were to flip, which neighborhoods are in demand, or heating up? Surely there are some rough areas in SA. 

As mentioned above, I don't think your assertion is correct. I think you just need to familiarize yourself with the market better (like this thread).  @Jason Hirko @Rich Ferradino mentioned some good central city areas. I have had great success in Lavaca & Tobin Hill (both historic districts I have lived in). The neighborhoods adjacent to those are starting to pickup but it's slow (Lone Star, Five Points, Beacon Hill, Alta Vista, Durango/Roosevelt, Denver Heights). The city has been dumping money into the East side, but with the exception of Dignowity Hill, the East side is still riddled with violent crime, drug sales, and crappy housing stock. Outside the central city, there are solid neighborhoods at the inner-ring for flipping (Castle Hills, Oak Hills, Ridgeview, East Shearer Hills, Macarthur Park/Terrace, Eden/Seven Oaks, Alamo Heights, Terrell Hills, and several more). Near the outer loop (loop 1604) there are good areas to flip as well (Shavano Park, Hollywood Park, Hills and Dales, Elm Creek, Braun Station, and many others. It all just depends on price range and your desired ROI and/or net profit. I live in Lavaca and choose to work on projects in/around Downtown. I prefer historic districts, but have done projects north of 1604, condos near the Medical Center, and manufactured homes as far south as Elmendorf.

2. Regarding Buy and Hold / Rentals. Which neighborhoods do you prefer? I'm looking at more favorable tax areas, lower crime, decent schools, etc. 

Single-family rentals or multi-family (2 - 4 units)? 

Rents are up across San Antonio, but so are property taxes. Again, the central city is hot.  Low vacancy, solid rents in areas like Southtown, Lavaca, Beacon Hill, Tobin Hill, Five Points, Alta Vista, Lone State, Blue Star,  South of Southtown, etc.  For lowest property taxes it seems to be best to stay on the edge of really hot areas (preferably not in historic districts).  Violent crime in San Antonio is for the most part isolated to a couple areas.  Property crime is prevalent almost everywhere.  Without knowing your rental criteria it's kinda of hard to tell you the best places to buy and hold.  I am biased to the areas I mentioned above, but if central city isn't your cup of tea, you can't go wrong in/around the Medical Center. There are plenty of SFRs properties, plenty of inexpensive condos that make great rentals, and this area is very central to the entire city,  

Hope this helps.