All Forum Posts by: Sterling Williams

Considering you're looking to house hack for a short period and likely looking for a good school district for the kids, I would take a hard look at Boerne. Great schools with some 2-4 multifamily, no new construction, but some solid B class assets. 

Fairoaks Ranch is located just between Boerne and San Antonio, where you will find the Hill Country lifestyle with 1+ acre lots. Fair Oaks is also still within the Boerne school district as well so there will be no issue once making the transition to a single-family home.   

New Braunfels is also an option if looking exclusively for new construction.  

Dave,

I would get in contact with a reputable 1031 intermediary. They will be the third party required to hold the funds until you purchase your other property. They will also be able to provide you with a proof of funds letter for your next purchase.

I would need to see the proforma or know the builder before I could say if the numbers would be achievable. 
 

DM me if you need a qualified intermediary contact. 

Matt,

Reach out to @Brooke Noth, she's who our office sends all of our clients to whether they are picking up their first home, investment property or refinancing out. She's one of the few lender's that you'll keep on your team for the longterm. She's an investor herself and understands the big picture. Most importantly she doesn't disappear when things get tough and keeps constant communication all the while looking out for her clients best interest. I guarantee you'll come back and thank me! 

Take a look at San Antonio. 1% deals can be found if your willing to be patient.

Congratulations!

I think in large part the tenant who rents small multifamily is looking at the unit for its utility. They are not looking for a single-family home where they are responsible for things such as lawn maintenance. Most of the fourplexes within MF subdivisions have scheduled lawn maintenance paid for by the landlord. This also creates conformity. Many of the fourplexes are also on a common water meter paid for by the landlord. If purchasing as new construction, you could implement a Ratio Utility Billing System (RUBS) immediately to circumvent that expense.     

Frank,

Welcome! Most of the tenant base in that location stem from Randolph AFB and employers in the periphery. Medium income around $45k-50k and mostly blue collar. You'll get many tenants who are families just moving into San Antonio due to PCSing or a job transfer and looking for an affordable option while they get rooted. Many tenants are drawn to small MF due to the affordability, employer proximity and lack of high-density as you will see with larger apartment complexes.

The answer to your question is yes, once the market is completely rented out and stabilized, those units will rent @ $1,250 per month during the spring and summer months, however, you'll likely see a dip in the fall and winter months if you're having to fill a vacancy. The issue with new development MF communities is that the first couple of MF properties to be finished and rented out will likely achieve rents suggested on the proforma. Where the drop-off occurs is when multiple properties are completed at the same time and you have multiple vacant units sitting on the market. In this situation, it becomes a game of chicken to see who drops rent first and it's likely the 1031 investor who came in at 40-50% down.      

I would certainly stress to you to fly into San Antonio and tour the multifamily market before pulling the trigger.  

Good luck and thank you for your service! 

Henry,

Both markets are stellar but it's going to be tough to find 1%+ MF deals in both of those areas and if one does come available, it's going to be located in C class pocket if you're open to that asset class. The Medical Center is really achieving premium sales prices and compressed CAP rates in the MF space and has been better suited for the 1031 Investor coming in with 30%+ down.

Castle Hills and some of the other area's around the airport are great locations in the MF space but we haven't seen much liquidity in the open market. Our most recent deal within Castle Hills that we closed on last week was 1026 Fabulous which was listed for $449k and failed to appraise due to an incompetent appraiser and an out of city flat rate broker who failed to go to bat for his client to appeal the appraisal. We had the fortunate ability to be in direct contact with the seller due to his agent sending all interested agents and buyers to his client directly. Long story short, we were able to get the property under contract for $410k and by adding a few additional properties to the appraisal comp sheet, we got the appraised value up from $380k (where the seller refused to sell) to $420k, so the buyer walked away with $10k in equity out of closing. Point being, sometimes there's value to be had within some of these pockets, you just have to find it. 

 DM me anytime.

I beg to differ on that argument. Multifamily, whether residential or commercial is in extreme demand and I don’t see that trend changing. There will always be a demand for affordable living options and MF assets provide that. As long as that demand is there, you’ll always have an investor who wants to capitalize on that segment if the numbers work. We are also seeing an increase of investors who want to owner occupy MF properties and “house hack”. I believe this segment will continue to grow.

Something to also consider is small MF assets allows a new investor a larger economy of scale as opposed to a single-family property. This will come to play when you’re paying your monthly mortgage payment on your single-family home and sitting with a 30+ day vacancy. With a 2-4 MF, you at least have 1-3 other tenants paying rent during that time (unless you have multiple vacancies at once).

Once you start putting in offers on MF properties, you’ll see the competition within the market and how quickly that asset moves. 

Don’t let your property manager dissuade you from purchasing an MF property if that’s your goal. If located in the right market and the numbers work, I think you’ll be happy with your decision.