Real Estate in San Antonio, Texas

Flipping

This type of project is ideal for investors seeking a short-term investment opportunity. Knowing when to walk away from a deal that has become financially unfeasible is just as important as knowing when to invest. The real estate market saw median profits of approximately $73,500 per property in 2024-though inexperienced investors often earned below that amount." For the best real estate information in San Antonio Danny Johnson knows his stuff. He has over 20 years experience real estate investing in San Antonio.

Every market has different price points, buyer preferences, and investment potential. This reality underscores the importance of avoiding costly mistakes, which can be devastating in today's market.

Consider what your ideal price range is, what type of properties you are targeting, what level of renovations you are comfortable managing, and which neighborhoods offer the best opportunities for profit. Signs of a potential deal include overgrown yards, boarded-up windows, mail piling up, or deferred maintenance on the home.

For example, an investor might purchase a dated home in a promising neighborhood for $300,000, invest $50,000 in renovations, and sell it for $400,000-resulting in a $50,000 profit before accounting for holding costs and taxes. The goal is to identify homes that are undervalued-whether due to foreclosure, distress, or market inefficiencies-renovate them to increase their value, and then sell them at a higher price.



Real Estate in San Antonio, Texas - Investment

  1. Apartment
  2. Estate agent
  3. Condominium
More to explore in San Antonio, TX

Why are ADUs so popular?

In the flipping business, your final sale price must exceed the combined total of the purchase price, renovation expenses, and holding costs to turn a profit. Don't fall into this trap-if the numbers don't work, be prepared to walk away. Numbers drive every decision, from purchasing price to renovation budgets and resale value.

In some areas, a $300,000 home is considered affordable, while in others, it is a luxury property. If you're struggling with calculations, seek advice from experienced investors or online communities.

Investing is simple! Use a mortgage calculator to compare interest rates and loan terms from different lenders.

As interest rates remain double what they were a few years ago and inflation continues to drive up renovation costs, investors are facing significant challenges," said Rob Barber, CEO of ATTOM, a real estate data analytics company. Even with meticulous planning, market conditions can shift unexpectedly.

Real Estate Investors

Which Cities Are the Best To Flip a House?

The National Association of Realtors predicts that four of the top 10 U. However, in reality, flipping houses is far more challenging than television suggests. Understanding tax implications, including deductions and capital gains taxes, can help investors maximize profits and avoid unexpected liabilities.

Finding the right property can take months, and once acquired, renovations can consume even more time-especially when dealing with unexpected repairs, permitting delays, or contractor scheduling issues. Additionally, because of the volume of projects we manage, we are able to negotiate favorable rates on both labor and materials.

Success in flipping starts with purchasing at the right price. Sometimes, a rejected offer isn't the end of the road.

Our analysts consider several factors, including the purchase price, transformation potential, and whether the lot is large enough to accommodate an Accessory Dwelling Unit (ADU). This increases the overall property value and makes the home more attractive to buyers due to the added flexibility.

Which Cities Are the Best To Flip a House?
How to buy a house in San Antonio, TX

How to buy a house in San Antonio, TX

While you have multiple options, it’s crucial to finalize your financing plan before you start searching for a property. Novices frequently rely on real estate agents to sell their properties, which adds commission expenses that cut into profits.

Real Estate in San Antonio, Texas - Investment

  1. San Antonio
  2. Building
  3. Real estate agent
Those with full-time jobs face a difficult choice: either dedicate evenings and weekends to hands-on work or hire professionals while still committing significant time to project management.

Mastering the financial side of flipping is non-negotiable. If you found the property off-market, you may need to negotiate directly with the seller or involve a real estate attorney to ensure the contract is legally sound.

If the same property has been sitting on the market for months and recently dropped to $190,000, the seller might be open to further negotiation. Institutional investors and private equity firms have also entered the house flipping market, increasing competition for properties.

However, if it’s currently listed at $275,000, you can immediately rule it out. Having a well-defined strategy helps narrow your search, but flexibility is also important.

Placing and Tracking an Investment

Investing in real estate requires significant capital. One of the most valuable team members you can have is a real estate agent. Thanks to our streamlined system, we complete builds in an impressively short timeframe.

Even highly skilled investors need a reliable team. Teaching is one of the best ways to internalize knowledge.

Before making any investment, new flippers must understand the fundamentals of real estate, renovation, and market dynamics. Stay disciplined, trust the numbers, and ensure the deal aligns with your projected profit margins before moving forward.

Some flippers even manage projects remotely, hiring local contractors and real estate professionals to handle on-the-ground work. Investors who choose to market and show the property themselves must be prepared for numerous site visits and buyer meetings.

Placing and Tracking an Investment
First time homebuyers

Contingencies are clauses in a contract that allow the buyer to walk away from the deal under specific conditions. This uncertainty underscores the importance of adaptability and conservative financial forecasting. While there's no need to spend thousands of dollars on real estate "guru" programs, serious investors should take the time to learn the basics.

While mortgage interest and home equity line of credit (HELOC) interest may be tax-deductible, the principal, property taxes, and insurance payments are not. While they offer protection, too many contingencies can make your offer less attractive to the seller.

You then have five business days to transfer the funds and secure your place in the investment. Investors must also be familiar with local zoning regulations, tax laws, and market trends to avoid costly mistakes.

ADUs are often referred to as guest homes, in-law suites, or casitas. Like any other business, flipping houses requires time, money, planning, patience, skill, and effort.

First time homebuyers
Real estate makes up the largest asset class in the world. Much larger than bonds and stocks, which respectively rank second and third by total market cap.

Real estate investing involves the purchase, management and sale or rental of real estate for profit. Someone who actively or passively invests in real estate is called a real estate entrepreneur or a real estate investor. In contrast, real estate development is building, improving or renovating real estate.

History

[edit]

During the 1980s, real estate investment funds became increasingly involved in international real estate development. This shift led to real estate becoming a global asset class. Investing in real estate in foreign countries often requires specialized knowledge of the real estate market in that country. As international real estate investment became increasingly common in the early 21st century, the availability and quality of information regarding international real estate markets increased.[1] Real estate is one of the primary areas of investment in China, where an estimated 70% of household wealth is invested in real estate.[2]

Overview

[edit]

Types of real estate investments

[edit]

Real estate investing can be divided according to level of financial risk into core, value-added, and opportunistic.[3] Real estate is divided into several broad categories, including residential property, commercial property and industrial property.[4]

Valuation

[edit]

Real estate markets in most countries are not as organized or efficient as markets for other, more liquid investment instruments. Individual properties are unique to themselves and not directly interchangeable, which makes evaluating investments less certain. Unlike other investments, real estate is fixed in a specific location and derives much of its value from that location. With residential real estate, the perceived safety of a neighbourhood and the number of services or amenities nearby can increase the value of a property. For this reason, the economic and social situation in an area is often a major factor in determining the value of its real estate.[5]

Property valuation is often the preliminary step taken during a real estate investment. Information asymmetry is commonplace in real estate markets, where one party may have more accurate information regarding the actual value of the property. Real estate investors typically use a variety of real estate appraisal techniques to determine the value of properties before purchase. This typically includes gathering documents and information about the property, inspecting the physical property, and comparing it to the market value of similar properties.[6] A common method of valuing real estate is by dividing its net operating income by its capitalization rate, or CAP rate.[7]

Numerous national and international real estate appraisal associations exist to standardize property valuation. Some of the larger of these include the Appraisal Institute, the Royal Institution of Chartered Surveyors and the International Valuation Standards Council.[6]

Investment properties are often purchased from a variety of sources, including market listings, real estate agents or brokers, banks, government entities such as Fannie Mae, public auctions, sales by owners, and real estate investment trusts.

Financing

[edit]

Real estate assets are typically expensive, and investors will generally not pay the entire amount of the purchase price of a property in cash. Usually, a large portion of the purchase price will be financed using some sort of financial instrument or debt, such as a mortgage loan collateralized by the property itself. The amount of the purchase price financed by debt is referred to as leverage. The amount financed by the investor's own capital, through cash or other asset transfers, is referred to as equity. The ratio of leverage to total appraised value (often referred to as "LTV", or loan to value for a conventional mortgage) is one mathematical measure of the risk an investor is taking by using leverage to finance the purchase of a property. Investors usually seek to decrease their equity requirements and increase their leverage, so that their return on investment is maximized. Lenders and other financial institutions usually have minimum equity requirements for real estate investments they are being asked to finance, typically on the order of 20% of appraised value. Investors seeking low equity requirements may explore alternate financing arrangements as part of the purchase of a property (for instance, seller financing, seller subordination, private equity sources, etc.)

If the property requires substantial repair, traditional lenders like banks will often not lend on a property and the investor may be required to borrow from a private lender using a short-term bridge loan like a hard money loan. Hard money loans are usually short-term loans where the lender charges a much higher interest rate because of the higher-risk nature of the loan. Hard money loans are typically at a much lower loan-to-value ratio than conventional mortgages.

Some real estate investment organizations, such as real estate investment trusts (REITs) and some pension funds and hedge funds, have large enough capital reserves and investment strategies to allow 100% equity in the properties that they purchase. This minimizes the risk which comes from leverage but also limits potential return on investment.

By leveraging the purchase of an investment property, the required periodic payments to service the debt create an ongoing (and sometimes large) negative cash flow beginning from the time of purchase. This is sometimes referred to as the carry cost or "carry" of the investment. To be successful, real estate investors must manage their cash flows to create enough positive income from the property to at least offset the carry costs.[citation needed]

In the United States, with the signing of the JOBS Act in April 2012 by President Obama, there was an easing on investment solicitations. A newer method of raising equity in smaller amounts is through real estate crowdfunding which can pool accredited and non-accredited investors together in a special purpose vehicle for all or part of the equity capital needed for the acquisition. Fundrise was the first company to crowdfund a real estate investment in the United States.[8][9]

Sources of investment returns

[edit]

Real estate properties may generate revenue through a number of means, including net operating income, tax shelter offsets, equity build-up, and capital appreciation. Net operating income is the sum of all profits from rents and other sources of ordinary income generated by a property, minus the sum of ongoing expenses, such as maintenance, utilities, fees, taxes, and other expenses. Rent is one of the main sources of revenue in commercial real estate investment. Tenants pay an agreed upon sum to landlords in exchange for the use of real property, and may also pay a portion of upkeep or operating expenses on the property.[10]

Tax shelter offsets occur in one of three ways: depreciation (which may sometimes be accelerated), tax credits, and carryover losses which reduce tax liability charged against income from other sources for a period of 27.5 years. Some tax shelter benefits can be transferable, depending on the laws governing tax liability in the jurisdiction where the property is located. These can be sold to others for a cash return or other benefits.

Equity build-up is the increase in the investor's equity ratio as the portion of debt service payments devoted to principal accrue over time. Equity build-up counts as positive cash flow from the asset where the debt service payment is made out of income from the property, rather than from independent income sources.

Capital appreciation is the increase in the market value of the asset over time, realized as a cash flow when the property is sold. Capital appreciation can be very unpredictable unless it is part of a development and improvement strategy. The purchase of a property for which the majority of the projected cash flows are expected from capital appreciation (prices going up) rather than other sources is considered speculation rather than investment. Research results that found that real estate firms are more likely to take a smaller stake in larger assets when investing abroad (Mauck & Price, 2017).

Foreclosure investment

[edit]

Some individuals and companies focus their investment strategy on purchasing properties that are in some stage of foreclosure. A property is considered in pre-foreclosure when the homeowner has defaulted on their mortgage loan. Formal foreclosure processes vary by state and may be judicial or non-judicial, which affects the length of time the property is in the pre-foreclosure phase. Once the formal foreclosure processes are underway, these properties can be purchased at a public sale, usually called a foreclosure auction or sheriff's sale. If the property does not sell at the public auction, then ownership of the property is returned to the lender.[11] Properties at this phase are called Real Estate Owned, or REOs.

Once a property is sold at the foreclosure auction or as an REO, the lender may keep the proceeds to satisfy their mortgage and any legal costs that they incurred minus the costs of the sale and any outstanding tax obligations.

The foreclosing bank or lending institution has the right to continue to honor tenant leases (if there are tenants in the property) during the REO phase but usually, the bank wants the property vacant to sell it more easily.[12]

Buy, rehab, rent and refinance

[edit]

Buy, rehab, rent, refinance (BRRR)[13] is a real estate investment strategy, used by real estate investors who have experience renovating or rehabbing properties to "flip" houses.[14] BRRR is different from "flipping" houses. Flipping houses implies buying a property and quickly selling it for a profit, with or without repairs. BRRR is a long-term investment strategy that involves renting out a property and letting it appreciate in value before selling it. Renting out a BRRR property provides a stable passive income source that is used to cover mortgage payments while home price appreciation increases future capital gains.[15]

The phrase was slightly updated in a 2022 Bloomberg News article noting that BiggerPockets added "Repeat" to the end, making it "BRRRR" to describe a real estate investing strategy of Buy, Rehab, Rent, Refinance, Repeat.[16]

Impact

[edit]

According to Lima et al. (2022), in Ireland, the financialization of rental housing, which includes the entry of institutional investors into urban rental housing markets, contributed to structural factors that create homelessness directly by worsening affordability and security in the private rental market, and indirectly by influencing state policy.[17][18] It was found that the history, politics, and geography of the REITs cause the collapse of Irelands market (Waldron, 2018).

See also

[edit]

References

[edit]
  1. ^ MacGregor, Bryan D.; Schulz, Rainer; Green, Richard K. (7 December 2018). Routledge Companion to Real Estate Investment. Routledge. ISBN 9781317687856.
  2. ^ Lau, Yvonne (2 December 2021). "China stores 70% of its wealth in real estate. Now, the property crisis is forcing investors to reconsider their favorite means of savings". Fortune.
  3. ^ Garay, Urbi, Investment Styles, Portfolio Allocation, and Real Estate Derivatives (2016). Garay, U. “Investment Styles, Portfolio Allocation, and Real Estate Derivatives.” In Kazemi, H.; Black, K.; and D. Chambers (Editors), Alternative Investments: CAIA Level II, Chapter 16, Wiley Finance, 3rd Edition, 2016, pp. 401–421.
  4. ^ Glickman, Edward (14 October 2013). An Introduction to Real Estate Finance. Academic Press. ISBN 978-0-12-378627-2.
  5. ^ Levy, Richard M. (5 November 2019). Introduction to Real Estate Development and Finance. Routledge. ISBN 978-0-429-89113-7.
  6. ^ a b Morri, Giacomo; Benedetto, Paolo (9 July 2019). "Introduction to Property Valuation". Commercial Property Valuation: Methods and Case Studies. John Wiley & Sons. ISBN 978-1-119-51215-8.
  7. ^ Glickman, Edward (14 October 2013). An Introduction to Real Estate Finance. Academic Press. p. 129. ISBN 978-0-12-378627-2.
  8. ^ "Fundrise Adds Big Name Investors Including Ratner, Elghanayan & Guggenheim: Funding Now at $38 Million". 26 September 2014.
  9. ^ Gage, Deborah (26 September 2014). "Renren-Backed Fundrise Bulks up in Real Estate Crowdfunding Sector". Wall Street Journal.
  10. ^ Glickman, Edward (14 October 2013). An Introduction to Real Estate Finance. Academic Press. pp. 95–107. ISBN 978-0-12-378627-2.
  11. ^ Lex Levinrad (17 December 2010). "Investing in Foreclosures For Beginners". Distressed Real Estate Institute. Archived from the original on 2 January 2013. Retrieved 31 December 2012.
  12. ^ Portman, Janet (7 February 2008). "Foreclosure causes heartache for renters". Inman News. Retrieved 24 February 2008.
  13. ^ Eisen, Ben (9 December 2018). "Housing Slowdown Unnerves the Fix-and-Flip Crowd". WSJ. Retrieved 15 October 2019.
  14. ^ "How young investors are chasing early retirement". Albany Business Review. Retrieved 15 October 2019.
  15. ^ Greene, David (16 May 2019). Buy, Rehab, Rent, Refinance, Repeat: The BRRRR Rental Property Investment Strategy Made Simple. pp. 13, 15.
  16. ^ Gopal, Prashant (25 March 2022). "Homeowners Spin Soaring Prices Into U.S. Real Estate Riches". Bloomberg.com. Retrieved 28 March 2023.
  17. ^ Lima, Valesca; Hearne, Rory; Murphy, Mary P. (11 May 2022). "Housing financialisation and the creation of homelessness in Ireland" (PDF). Housing Studies: 1–24. doi:10.1080/02673037.2022.2042493.
  18. ^ Lima, Valesca (2 January 2023). "The political frame of a housing crisis: Campaigning for the right to housing in Ireland" (PDF). Journal of Civil Society. 19 (1): 37–56. doi:10.1080/17448689.2023.2206158.