San Antonio Duplex house hacking deal

[Dannielle Hoffman]

Hello BP World :)

I am moving to San Antonio soon and weighing my options for investing there.  I will be selling my flip-in here in Chicagoland in the spring and plan to make a healthy profit.  It should be enough to purchase a home for myself and hopefully another property to rent.  However, some of the duplexes down there seem too good to pass up.  I could purchase one to live in one side to house hack and another purely for rental purposes.  But I am new to this so I want to make sure I am not am not missing anything.  Numbers on a few are close to this:

Each side is a 3/2 and about 1250 sqft which based on my research should rent for about $1,100 per month.  Does that seem accurate?  These properties are on the north and west side of town with 1 or 2 car garages and at least average to good schools.  

Purchase price - $165,000

Rent - $2,200 (if I rent both sides)

If I live in one side then I can get a less than 4% APR conventional so the principal and interest payment would be about $627 per month

taxes - $327

insurance - $120

all utilities metered separate

Vacancy - $176 (is 8% a good average for the area?)

Repairs - $168 

CapEx - $182

Property Management - $220

Who and how do you pay for garbage pick up in Texas?

Making total expenses including mortgage - $1,841 so roughly $360 a month in profit if both sides are rented and if I am living in one side, the other will cover all my PITI and I can property manage it myself.

I have about $7,500 put in the budget to do some minor updating (most seem to need some landscaping updates, minor bath updates, etc.). All simple things I could do the majority of the labor on myself. Considering 20% down and $5k in closing costs it would be a roughly 9% cash on cash return. If I do FHA I only get about $150 a month in profit but up the cash on cash to 12%. However, I kind of prefer the cash flow and lower payment with no PMI.

A few other questions about rentals down in SA: 

Do people renting duplexes expect refrigerators, washer and dryers?  How about lawn care?  A 2 car garage?  Ceiling fans? Pet rent?  How is the rental market?  Looking online it seems like there are lots of rental properties available all the time.  What kind of properties rent the fastest and for the most on the west and north side (3/2 SFRs, 2/2 multi, 1/1 large multi, etc.)?  

I know this was a lot but I have read some of the other post and it seems most posters don't give enough info.  I appreciate any feedback.  Thank in advance!

[Joe Scaparra]

Dannielle, Welcome to Texas!   Shhhh, Shhh, Shhh@@!!!!!!  Don't speak too loudly and don't let the Northerns know about what you are about to discover!!!! But yes duplex investing in San Antonio, Austin, Dallas or just about anywhere in TEXAS is a no brainer!  But please KEEP IT on the Down low!!

Most duplexes are as you found them, and they usually are separate meters for utilities.  So the tenant gets there own electric, water, gas, trash and sewer!  Unless I am marketing to students (college) I make the tenant responsible for the yard.  I supply refrigerator, stove, microwave, and dishwasher.  I usually don't supply washer dryer, however if I do I charge extra. But please don't tell anyone about this crazy deal down here in Texas....Shhh Shhh Shhh.  

Yeah, the weather is golf weather today and most days, however in the summer it gets hot, so I supply ceiling fans in all my bedrooms and living rooms.  They can be bought for about $70 each with lights and they last forever.  Dresses up the room nicely!  Right now you are projecting too much for vacancy.  For planning that is fine but real time now, Rents are on the RISE.  Tenants don't want to move, as most landlords are slow to raise rents to keep pace.  ALL MY RENTALS need to be raised but I my conscience tells me $25-50 raise when market is telling me $75-100.  It is hard to keep up, therefore your tenants realize too and they don't want to move.  You put a sign in the yard and you have to take it down in 3 days because you get too many inquiries!  It is a crazy time in TEXAS.  

Northside of San Antonio, New Braunsfels , San Marcos and Austin are all great locations.  Austin is getting pricey but north of Austin, like Round Rock or Georgetown is still affordable.  If you find a duplex with a garage they are usually one car each side.  3/2 or 2/2 are the best but 2/1 still rent well also.  Good Luck, but please Keep IT on the Down Low....dammit!