Lackland Buy and Hold

Real Estate Deal Analysis & Advice
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Lackland Buy and Hold

John Wigglesworth
Member since 2018 · 13 posts · 11 votes

Investment Info:

Single-family residence buy & hold investment in San Antonio.

Purchase price: $100,408
Cash invested: $46,387

Was able to purchase with just $4K using a "Subject To." The home needed foundation and plumbing repair which shot up the repair expense. However, it was rented before I could finish the rehab at $1450 a month. About to refinance and get a large chunk of my out of pocket back.

What made you interested in investing in this type of deal?

The Lackland area properties can meet the 1% rule and have some good appreciation. That's not an easy combination to find in San Antonio.

How did you find this deal and how did you negotiate it?

Word of mouth. Friend of a friend found out I buy real estate and he had a nightmare rental to get rid of. Negotiation was over the phone.

How did you finance this deal?

Bought it with a subject to. Financed the repairs using a HELOC on my residence. Refinancing to get a little over half of my repair cost paid back to the HELOC.

How did you add value to the deal?

I replaced all the flooring with vinyl plank. It's more expensive than carpet, but a better long term ROI. I always change out all the outlets, light switches, hardware, and light fixtures for a clean new look. Everything is switched from old gold to a new brushed nickel, even door hinges. In kitchen, changed hinges, drawer pulls, and hardware, plus $500 for a used complete set of stain made it all look like brand new.

What was the outcome?

It was rented while we were in the middle of rehab. Went fast.

Lessons learned? Challenges?

When you raise a slab foundation, budget to replace half the driveway. Count on replacing a lot of the plumbing when the foundation moves. Lowes has some lower priced vinyl plank flooring that I like, but their install is more expensive than it appears. Moreover, I buy underlayment at Habitat for Humanity for half the cost of Lowes and it is good quality.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I used Texas Prestige Property Solutions. The owner is a general contractor but is hands on with everything, not just a project manager overseeing subs. He redid the front porch for a surprising good price, and it's unlike any railing in the neighborhood.

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  • Andrew K.
    Rental Property Investor · San Antonio, TX · Member since 2011 · 266 posts · 158 votes
    5y

    John,

      Congrats on the deal!  The place looks great--not surprised that it rented quickly.  How did you market the rental listing?  Any tips on listing a home for rent before all the work is complete?

      Do you self-manage or use a PM?  Being close to Lackland, are your tenants military/government employees?  

    I was really close to buying a SFH near Lackland with the intent to use it as a STR--renting to families of BMT grads. Timing is everything with the STR market taking a hit due to lockdowns this year. Still an area of town I'm very interested in!

      Congrats again!

    -Andrew
     

    0Reply
  • Stone Saathoff
    Investor · San Antonio, TX · Member since 2019 · 576 posts · 307 votes
    5y

    I'm not surprised. In San Antonio, I've seen rental investors have the best luck on single family deals in the Lackland area. Congrats on your success.

    0Reply
  • John Wigglesworth
    OP
    Member since 2018 · 13 posts · 11 votes
    5y

    Andrew, 

    I didn't market the property beyond putting a sign in the yard. I often put properties on places like trulia, zillow, and craigslist.  However, it was my contractor who put out a for rent sign early in the yard (before renovations were compete).  I probably had 7-8 inquiries just with the yard sign.  In two of my rentals, the simple yard sign resulted in a tenant.

    I don't use a PM.  I just have 5 rentals so I'll grow and learn a little more before handing over the management.  

    I'm in the military myself, and can tell you a large percentage of military don't want to live near base.  Its' great for AirBnB due to the constant graduations.  None of my 4 rentals near Lackland are rented by military.  I think 78227 off Loop 410 is a great area to invest, nevertheless.  

    John

      

    1Reply
  • Zeriet Woldeab
    Rental Property Investor · Austin · Member since 2020 · 14 posts · 4 votes
    5y


    @John Wigglesworth Congrats on the deal and success in getting a renter before the rehab is complete, I am also focusing on that area, the numbers seem to work for buy and hold. How did you refinance went? Were u able to get all the cash out?

    0Reply
  • Alexi Schreier
    Real Estate Agent · St Petersburg, FL · Member since 2014 · 117 posts · 38 votes
    5y

    @John Wigglesworth awesome investment, thank you for sharing.

    Could you go into more detail on the terms of the subject to agreement and how you only had to pay $4K? That is amazing.

    0Reply
  • John Wigglesworth
    OP
    Member since 2018 · 13 posts · 11 votes
    5y

    First, you have to hire a lawyer to draw up the wrap mortgage.  I basically took over the owner's mortgage with $4K out of pocket.  The mortgage stays in his name, but I make payments.  Everything comes to my address, even the 1098, but it's in the first mortgage holder's name.  As the payer, I get to claim everything for taxes.  If I don't make a payment, the first buyer can foreclose and take back the house will all the improvements I've made.  If the bank finds out and wants to, they can call the loan based upon the "due on sale" clause in the mortgage.  Banks have no interest in doing that if I'm making the payments.  It's a little bit more work when you refinance and get it in your name, if you go that route, but it's a good way to bail someone out facing foreclosure and to get a property for little to nothing.  This house still needed a lot of rehab, so the $4K only got me the property, but it wasn't rent ready.  I'm in the property all for $140K, it rents for $1465, and it appraised for $170K when I refinanced.   All said and done, I've got about $20K of my own money in the house. The end numbers aren't as sexy as the $4k out of pocket to purchase, but it's still a good deal.  Don't get fooled by the sexy stuff, good is good, the great stories are all you hear on the podcasts and commercials.  

    1Reply
  • Dmitriy Fomichenko
    Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    5y

    @John Wigglesworth , way to go, congrats!

    0Reply
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