Properties in San Marcos, Kyle, New Braunfels

[Henry L.]

I've been looking at SFH, MFH, and condo properties in these areas, however, all of my deal analyses turn up with a negative cash flow and negative Cash on Cash ROI. Is that just the nature of the seller's market there, or am I being too conservative with my assumptions?

For example, for a 2-3 bd, 2 bth SFH, the price is about $125K to $160K, and my real estate agent says the the average rent I can get is about $1200-$1450 a month. I feel that I can't even make the 1% rule, and usually average between 0.7% and 0.9% on the best deals.

For a duplex, it's about $265K average, and I estimate the total rents to be about $2000-$2200.  That's not even close to the 1% rule.

For the cash flow analysis, I use a 10% vacancy, 5% repairs, 5% capital investment, and 4.2% interest rate.

Overall, I feel like I can't get a good deal unless I bought a really ugly house and then fixed it up.  However, it's been difficult to find a house that's a good deal with few repair issues.  Has that been others' experience as well in these cities?  The issue for me is that since I'm not local to the area, I'd like a place with relatively few repairs.

Has anyone just invested anyway if they are only hitting 0.9% or 0.8% for the monthly rent over purchase price?

Thanks for your thoughts!

[Jon Klaus]

Yes, you are in a very competitive market. Are you only looking at MLS, or are you also seeking out off market deals? You might consider a direct mail campaign to find wholesale deals. You should be able to find one percent deals that way.