All Forum Posts by: Betty Cruz

@Charles Moore. Hi Charles - it absolutely is an issue. Freddy and Fannie loans prohibit lending on a duplex with a back house. I have been down this path and there are several posts on Airbnb about it. @Andrew Postell is my lender and can definitely confirm this for you. A workaround can be to close the back house and call it storage or a garage or gut it, take out toilet, kitchen etc so it is not considered a living quarter. This will lower the value for lending purposes but it will help assure that it is a duplex. However, your next issue will be that it is a duplex   but zoned single family. This will get stopped most likely when the appraiser comes out. They usually check zoning    (They have in my cases) and won’t want to lend on something not zoned correctly. Commercial or other non Fannie/Freddy loans may not care. Your other option is to challenge the zoning. I have done this successfully. A call or email to the city can tell you if that’s a possibility. Hope this helps. Pm me if you want to connect to discuss this further. 

@Joseph Cacciapaglia Your reply was excellent and everything I was trying to say yet written better. Cheers!

@Paras Newbe - 

 I don’t want to discourage you but I do want to be frank, as I am sure that’s why you are asking - because you want honest, realistic advice. 
1. Yes there are lots of out of state investors. And yes tons of them get into trouble by attempting rehabs. I have many stories like @aaron bihl has mentioned. But if you don’t want to do any rehabs, you would just need to pay more for a property. And if you pay more, you would have to put a lot more down to realize any cash flow, which is what you said you were after. 
3. No I don’t believe you will realize more cash flow from a 4 plex vs single family necessarily. As @Joseph Cacciapaglia stated, they are competitive and go fast. If they are good shape, they almost always 1 percent deals or less. And for many, that’s good enough, especially if their play is for long term, appreciation, or tax benefits. But you have specifically mentioned cash flow as your goal.

4. I wish that were true. There’s no one answer to all of this. However, we have bought all our houses in appreciating areas and since there isn’t a cap on increasing tax assessments on non-homestead properties, tax hikes can easily outpace rents and what the market will bear. Refer back to my response to question number 2 from your first post that I responded to. Basically, incomes here don’t support raising rents very easily. 

One thing I love about real estate is that there is no one answer. There are many ways to make money and many strategies. I’m happy to help you analyze a deal or help however I can. 
Best of luck!

I agree with every comment so far. I just have a few additional comments to add:
1. Is it right that it is easy to get Multi Family houses in San Antonio, TX? 
...I’m not sure what you mean by “easy” but since you want cash flow, I will tell you there is nothing easy about getting that. To me easy is buying something ready to rent and handing it over to property management. And I guess if you put enough down, you will get cash flow. BUT, if you plan to put little down, you will have to be prepared to buy “projects” and rehab in order to force some equity and then refinance. At least that’s the only way I’ve been able to do it. I’d love to know any easier way if anyone wants to chime in.

2. Economic growth here is nowhere near Austin. How do other investor feel about this? My main goal being the cash-flow, should i be worried about this? Does apartment get rented quickly for long term (1 year+) quickly?
....Perhaps your concern about economic growth is better termed as economic strength? We are fast growing and have lots of upside as others have written on this thread;however, there is a lot of poverty here and poor paying jobs. COVID shutdowns have really brought that fact to the forefront of concerns for our city as evident in the national news-making massive turnout for food distribution in our city.

3. Want to hear some more from other investors in this area. Should I be moving forward here? Should I be looking somewhere else? Anything spacial (i.e. Property taxes are pretty high) I should know being in Seattle?

...I ditto Rick’s cautionary comments on our property taxes. They are high and go up wildly. As an example, a property I bought a year and a half ago for $163k is tax assessed for this year at $220k! Another one I bought 3 years ago for $160k is now assessed at $240k. 

4. I am in Seattle and I will be doing everything (Buying, Inspection, property management) remotely by getting local company's help. Any suggestions?

...Long distance investors amaze me. I have no idea how that is done and marvel at those who do it. I know there are lots of investors who are able to do well so I will just leave comments to that end to those who have the experience. I will tell you that my partner and I have encountered many projects that we unfortunately have to finish and re-do because out of state investors were not properly vetting their trades. And here in San Antonio we have an abundance of incompetent trades/contractors who aren’t aware of how to pull permits and adhere to required city building and remodeling codes. 
Best of luck! 

@Stone Saathoff $5500 for 2700 sf is what I paid most recently.

Mine haven't but I do notice that each time I've had a company for a while, they seem to little by little increase. Then I shop, pick a lower one, and then the cycle resets itself.

@Heather H. I enjoyed reading your very candid post. I love when people share the good, the bad AND the ugly. It helps other people as they take the plunge to get started. You may already know this, but perhaps some don't, that you can know about potential "shoddy" workmanship by making sure the work is permitted. This is easily verifiable on San Antonio's Development Services website - https://www.sanantonio.gov/DSD/Online/Search

Of course, we've seen lots of projects that passed inspections for permits and still were poor quality. Sounds like the furnace install did not go through proper permitting because that never would have passed - same with the ductwork because that has to be correct to pass inspection. But a clumsy sink install wouldn't be caught through city inspections unless it was an issue with the actual plumbing install.

Are you doing anything else in San Antonio? I'd love to connect!

@Simon Stahl. Like @Joseph Cacciapaglia has stated, there are lots of variables. The only way to really know if it's a competitive premium is by shopping the policy. I have a great local broker I use. If you want his info, just PM me. Good luck!

@Stone Saathoff I’d say I have my Airbnbs rented by being flexible. I have two Airbnb units. I took the advice/recommendation of Airbnb and cut the price for month long stays about 60 percent for military, nurses, doctors etc. This brought be a military guy who was “stuck” in san antonio because the military is not moving anyone. He wanted to bring his wife down to be with him while he waits this out so he needed an off-base place. The other unit is filled with a friend who is not military but needed month to month for other reasons. He is paying full rate as if it is a regular long term lease only it’s month to month. 

I buy houses with back houses inside loop 410. Always looking. I’ve made one offer that was 6 percent less than asking price and I was outbid. 

I haven't been on the forums in a while, and when I logged in I was surprised not to find many recent local posts about the affects of Covid-19 and the current market in San Antonio. I would love to know what everyone is thinking in terms of activity, opportunity and plans to buy. No one has a crystal ball, but I'm interested in a discussion about the affect of the virus based on what you are experiencing first hand. 

I will go first... so far my tenants are paying (only one has lost her job so far). My Airbnbs are filled (one at a discounted rate) on monthlong rentals. My one vacancy is going on 7 weeks, which is the longest I have EVER had a vacancy. I'm actively looking to buy but haven't found any real deals that I was hoping to come across.