San Antonio 78202, where do you think it's going?

Question

78202 Isn't the best area, looks c/c- from what i'm seeing. I've had a few deals come across my email with properties in this zip code. They would cash flow a little but not enough for me to deal with c- tenants. I'm curious where those in the know think this area is going. I've heard this area can be high risk high reward but what are the driving catalysts? I saw the city has passed some sort of bond for improving the area but it has been my experience that true urban renewal comes from the people and businesses that move into an area more so than local government. So, please look into your crystal balls and tell me where this area is headed!
Thanks,

Conrad

Joshua Enriquez · Answer

I pulled MLS sold data from (2017) & (2018) East of New Braunfels back in July,  in an attempt to measure appreciation based on market data. Here's what I discovered:

The highest selling property in (2017) was $170,000 (1849 Montana St - 3/2 - 1450 sq ft - 73 days on market - 1st Seller - Was a 2017 New Build); in (2018) (Jan 1st to June 26th) the market ceiling has jumped by 59% to $270,658 (817 Potomac - 3/2 - 1515 sq ft - 49 days on market - FHA - Was a 2018 New Build). The lowest selling property in (2017) was $15,900 (1818 E Crockett - 2/1 - 840 sq ft - 5 days on market - CASH - was a fixer upper); in (2018) (Jan 1st to June 26th) the market low has jumped by 183% to $45,000 (638 Gulf - 3/2 - 982 sq ft - 9 days on market - CASH - was a fixer upper). Median home sales in this area (2017) were $58,684. In (2018) the median sales have increased by 48% to $87,000. Based on success of some of the investors I work with I think this area is suitable for several different strategies,(rental, owner finance, flip). These number reflect where the area has gone in the past year, if this trend continues, this may be your perfect time to buy low and sell high at a later date.

The lowest selling property in (2017) was $15,900 (1818 E Crockett - 2/1 - 840 sq ft - 5 days on market - CASH - was a fixer upper); in (2018) (Jan 1st to June 26th) the market low has jumped by 183% to $45,000 (638 Gulf - 3/2 - 982 sq ft - 9 days on market - CASH - was a fixer upper).

Median home sales in this area (2017) were $58,684. In (2018) the median sales have increased by 48% to $87,000.

Based on success of some of the investors I work with I think this area is suitable for several different strategies,(rental, owner finance, flip). These number reflect where the area has gone in the past year, if this trend continues, this may be your perfect time to buy low and sell high at a later date.

Jason Hirko · Answer

I have a lot of clients betting heavy on this area - buying properties that cashflow as rentals with the intention of flipping in 5-10 years if the gentrification continues east. If it doesn't, they still have a cash flowing rental at the end of the day, so not a lot of downside. I mean some of those neighborhoods don't have much room to get any worse...

Betty Cruz · Answer

@Conrad Metzenberg I am currently buying a triplex in the area...I will let you know! Some of the things I look for are rehabs, cool eateries and bars, and community involvement. I see all of that in the Dignowity Hill area. Currently, I use New Braunfels Ave as my boundary - anything east of that street is still a ways off in my opinion. I agree with @Rick Pozos that the "area has lots of people who have been there for a long time and are not moving or rehabbing." However, some will be forced to as property taxes are skyrocketing.

You mentioned being concerned about a C area with C tenants but the cool thing about that area to me is that there are A and B tenants looking for A and B rentals in a C area. In other words, a lot of (mostly) young people want to live there, but finding nice properties to rent is tough. That's the niche I'm trying to deliver to.

I'm excited about the possibilities for that area...if I see a hipster toting a cello, I will let you know!

Jason Hirko · Answer

@Conrad Metzenberg Like @Betty Cruz said, between rehabs and places to drop disposable income (restaurants, bars, breweries, etc) tells me what I need to know. Search for "Dignowity Meats" and you'll see what I mean. That is quintessential gentrification.

Rick Pozos · Answer

The eastern half of the zip code is just plain distressed(ghetto). The western half that is right next to down town is gentrifying as @Cassie Villela mentioned. There are some beautiful homes from the early 1900s all throughout the area. The problem is that the area has lots of people who have been there for a long time and are not moving or rehabbing. The area was run down for a long time. Some of the homes look like tear downs. Since part of the area is considered historic, some of the homes can not be torn down.

The Promise Zone. When the government has given money to an area, I have never seen it do any good in the long term. It seems like the govt is trying too hard to make this area great again. There is a reason that the area has not grown and developed on its own. The answer being that the big money does not want to be there right next to a D area. Look at the city heat maps with crime. Still pretty rough area.

Conrad Metzenberg · Answer

Aha! So my realtor was showing me stuff east of New Braunfels and I just wasn't getting the gentrifying vibe either.  I like what you use as tells.  Find me a cool eatery in a bad area, one of the ones that sells avocado toast for way too much, and that'll be a bad area soon to be a great area.

Cassie Villela · Answer

Dignowty Hill is becoming pretty gentrified...I have friends who live there. But to me it’s still kind of risky. It’s definitely thought of as an area with lots of potential...but I think at this point investing there would be speculative. I have someone wanting to list a home in the area, and it’s very difficult to pull comps on it because the values vary so dramatically block by block. Definitely be careful about using numbers a wholesaler gives, because it’s easy to cherry pick comps in that area. ;)

TJ Jeff · Answer

@Conrad Metzenberg  Avocado toast is a great one. speaking of gentrification indicators, i've noticed some that stand out:

more than one night time dog walker, extra points if it's a female on a cell phone; tattoo parlors, funky coffee place, small niche workout gyms, anything Asian that isn't Chinese, all within 3-4 blocks; any hippy or hipster sightings, extra points if you see them at Whole Foods later; very low people count in the middle of the day

Conrad Metzenberg · Answer

@Jason Hirko, I agree.  That place looks like it would sell avocado toast lol.

@Joshua Enriquez do you have any rental trend data for that area?  I'd be a lot more comfortable as an investor if I saw  rental rates going up as well.

Conrad Metzenberg · Answer

Jason,

I’m not saying it won’t gentrify eventually.  I’ve watched the crappiest parts of town become the best but there has been something that precipitated that transformation.

In Santa Barbara it was the only cheap space for small wineries to open up tasting rooms was a rough industrial area.  It took less than a decade to quadruple property values and rents there.  However in Lompoc, the wine ghetto is still, well...the ghetto.

Looking West I see signs of change; Essex, a beer garden, things that I’d like to live around. The area that the deal was in I saw none of that anywhere nearby.  However, I’m an out of towner. I don’t walk around that neighborhood.  Often gentrification is something you pick up on by observing little things.  There was a podcast not too long ago where an investor was in a bad area and saw a kid carrying a cello.  That was an indicator to him that the area was beginning to turn.  So what are your indicators?

San Antonio 78202, where do you think it's going?

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