San Antonio BRRRR Reality Check

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San Antonio BRRRR Reality Check

Alexi Schreier
Real Estate Agent · St Petersburg, FL · Member since 2014 · 117 posts · 38 votes

It would be great to hear from people with experience in the San Antonio market how realistic it is to successfully BRRRR a rental property there.

I think San Antonio has a lot going for it: job and population growth, diverse economy with durable industries, property values rising but still relatively affordable, the list goes on...

However, I've been having a hard time finding deals (on the MLS) with the following criteria:

- In decent neighborhood (C/B)

- All-in costs are 75% of ARV

- Cash-flow after a refinance where you pull out 75% of the ARV

From what I've seen, the numbers in SA seem to work at around the $190K ARV price point. They usually need pretty significant rehab (which is what we want!) let's call it $50K in rehab. That brings us to looking for properties that are being sold for $90K (90 + 50 = 140 which is 75% of the 190 ARV).

Don't get me wrong, there are some properties out there in decent neighborhoods selling for $90K, but they're few and far between and usually don't stay on the market long.

Would you say this is an accurate reading of the market? Is it realistic to search for deals on the MLS or is it more realistic to work with a wholesaler in this market if you're looking to meet the above criteria? Is the BRRRR method realistic?

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Rick Pozos
Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes
6y

I have purchased properties for the last 16 years. BUT now is not the time to buy off the MLS. It is not the time to buy from wholesalers either. They will find a great deal and then mark it up so much that they are the only ones making some money on the deal. They leave too little meat on the bone for the end buyer. Whatever you do, dont go to the big wholesalers who claim to sell 20 to 30 deals per month. Slick marketing is tempting, but dont fall for it.

YOU need to do the marketing to find the deals. THIS is the only way that people make money consistently and that the deals will be at the 70% or 75% range that you desire. I have seen too many people THINK that they have a deal because of the marketing that the wholesalers put out. High ARVs and low rehab budgets are a recipe for disaster for the newbie.

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  • Kris L.
    San Antonio, TX · Member since 2019 · 930 posts · 836 votes
    6y

    There are neighborhoods where it can work, and neighborhoods where it won't. It might work with <1% of the MLS listings, but maybe not even that high. I think a good wholesaler might be able to have a higher rate, but I haven't found one yet who has good ARV or rehab numbers, so you really need to know what you are doing before using them. It's a tough market out there for BRRRR right now.

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  • Rick Pozos
    Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes
    6y

    I have purchased properties for the last 16 years. BUT now is not the time to buy off the MLS. It is not the time to buy from wholesalers either. They will find a great deal and then mark it up so much that they are the only ones making some money on the deal. They leave too little meat on the bone for the end buyer. Whatever you do, dont go to the big wholesalers who claim to sell 20 to 30 deals per month. Slick marketing is tempting, but dont fall for it.

    YOU need to do the marketing to find the deals. THIS is the only way that people make money consistently and that the deals will be at the 70% or 75% range that you desire. I have seen too many people THINK that they have a deal because of the marketing that the wholesalers put out. High ARVs and low rehab budgets are a recipe for disaster for the newbie.

    8Reply
  • Justin M.
    San Antonio, TX · Member since 2019 · 19 posts · 10 votes
    6y

    @Rick Pozos solid advice. I've been looking at properties on the MLS for a while now and I am having a tough time finding anything even remotely worth looking into. It's like they say on the podcast, you have to get out there and make the deals.

    2Reply
  • Alexi Schreier
    OP
    Real Estate Agent · St Petersburg, FL · Member since 2014 · 117 posts · 38 votes
    6y

    @Kris L., @Rick Pozos thanks for the feedback. You said what I was expecting to hear... And thanks for the tips on wholesalers and marketing!

    Rick do you buy and hold your deals? Flip them? What’s your strategy in today’s market?

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  • Rick Pozos
    Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes
    6y

    I have sold off the few rentals that we had with owner financing. Continue to rehab and sell. Bought some non-performing notes lately and got them performing(all local). I am not really looking for rentals at the moment, but you never know what you will find.

    I am looking at under 50 unit value add multi family properties. But whatever works I am chasing it.

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  • Alexi Schreier
    OP
    Real Estate Agent · St Petersburg, FL · Member since 2014 · 117 posts · 38 votes
    6y

    @Rick Pozos sounds like you have a lot of awesome options to choose from! Thanks for sharing.

    1Reply
  • Tamara Deering
    Real Estate Agent · Austin, TX · Member since 2019 · 235 posts · 194 votes
    6y

    @Alexi Schreier

    You can make money with the BRRRR strategy in San Antonio, there are deals out there but you either have to be wiling to crunch a lot of numbers or work with someone who is willing to do that. I work with investors in the San Antonio and Austin markets as well as being an investor myself.

    Strangely the biggest problem with the San Antonio market is the availability of potential deals out there. Currently I'm working a list of over 200 possibly properties in San Antonio crunching the numbers determining the offer price to hit the target returns for my clients and making offers.  Contrast that to the Austin market where I'm lucky if there are 10 properties a day that merit additional scrutiny. Austin is definitely a market where you have to make deals and opportunities happen, San Antonio is more a matter of mining for a great deal.

    1Reply
  • Alexi Schreier
    OP
    Real Estate Agent · St Petersburg, FL · Member since 2014 · 117 posts · 38 votes
    6y

    @Tamara Deering I'll send you a DM.

    0Reply
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