Do you know anyone who is actively investing in San Antonio rental properties? Or have you heard about the surge in demand for rental properties?
Chances are, you’ve been exposed to the hot real estate investment environment, whether directly or indirectly. People all over the country are interested in buying up rental properties in San Antonio and surrounding areas – but why?
What is it that makes rental properties such a hot investment?
The Value of Rental Properties
Let’s start by reviewing the overall value of rental properties, regardless of where they’re situated. The idea behind rental property investment is simple. You buy a property that can house tenants, then fill that property with paying renters. You collect rental income, usually in excess of your monthly expenses, and hold the property while it appreciates in value.
There are several key advantages to this approach:
- Passive nature. Managing rental property is a somewhat passive financial strategy. You’ll be responsible for marketing the property, finding tenants, and handling issues that arise – but at the beginning of each month, you’ll collect a rent check even if you haven’t done anything. Additionally, if you hire a property management company, you can spend even less time managing your San Antonio property. Your property manager will handle nearly all the day-to-day responsibilities, and you can enjoy the profits almost hands-free. The passive income can conveniently supplement your full-time job or even help you retire.
- Monthly rental income. People also love rental properties because they have the potential to generate income on a monthly basis. As the property owner, you’ll be responsible for paying the ongoing expenses related to the property, including principal and interest on the loan, property taxes, and the cost of ongoing repairs and maintenance. But in most cases, the rent you collect will exceed these expenses – often by several hundred dollars. With consistent income, you can ease the burden of your personal expenses, fund your retirement, or even save up to buy an additional rental property – allowing you to snowball your earnings.
- Long-term appreciation potential. The monthly income is nice, but it’s not the only financial advantage you’ll get from investing in these properties. If you invest in a quality home in a great neighborhood and you take good care of it, it has the potential to appreciate significantly – especially over the course of years or decades of holding it. In a best-case scenario, you could double or triple your initial investment. And if you take advantage of a loan, you’ll have the power of financial leverage on your side, boosting your gains even further.
- Hedging against the stock market. The stock market remains one of the most popular investment choices for financially savvy individuals, but it has some downsides. You can potentially see a high rate of return, but if you choose the wrong stocks or if the broader economy experiences a period of slowdown or volatility, it can work against you. Real estate investments function as a kind of hedge against the stock market, since they tend not to be as unpredictable or volatile. They’re a much more stable, reliable investment.
- Flexibility and future. With a rental property investment strategy, you’ll have a lot of options – and you can explore those options however you want, well into the future. You can choose to prioritize single-family homes or optimize for multi-family homes. You can attempt to secure multiple properties in a single neighborhood to achieve more control or select individual properties in multiple different neighborhoods to diversify your portfolio. And over time, you can work on improving your existing properties or keep expanding to take advantage of new ones. The strategy can be almost anything you want it to be.
Why San Antonio?
So why is San Antonio, in particular, such a hot market for rental property investment?
- No state income tax. First, there’s no state income tax in Texas. This is a small benefit, admittedly, but compared to other states with high income taxes, you can end up keeping more of your profits in Texas. Texas does have higher sales and use taxes, as well as higher property taxes in some areas, but it still represents an advantage.
- Affordable prices. Rental property buyers also love San Antonio because of its affordable prices. Some of the biggest, most popular cities of Texas are vibrant cities, with surging demand for rentals – but if you want to enter the market, you’ll need to pay exorbitant prices to get your hands on a new property. In San Antonio, this isn’t necessarily the case. There are some more expensive and less expensive areas, but if you’re open to multiple options, you can likely find a property well within your budget.
- Unique neighborhoods. San Antonio is a single city, but it contains a number of unique, diverse neighborhoods. For example, you can head to Northeast/McAllister Park to find well-maintained, modern updated properties if you want a hassle-free rental – but competition is fierce, so it may be harder to find a property at a good price. Or you can head to Woodlawn Heights if you want a less expensive house with more accessibility to the city – as long as you don’t mind a property built in the 1950s.
- Plentiful jobs. One of the hallmarks of a great city for real estate investment is ample job opportunities; when people have work and steady income, they’re more likely to settle down, and they’ll have no problem paying rent every month. And San Antonio is overflowing with job opportunities.
- Great weather and natural scenery. On top of that, people in San Antonio love the warm, comfortable weather and the amazing natural scenery. It’s a top choice for renters of all demographics, so there’s never a shortage of demand.
Rental properties are an amazing financial investment, but they can also be stressful and time-consuming to manage. That’s why it pays to hire a property management company that can help you throughout the process – like Green Residential. Contact us today for a free consultation!
Michael is Green Residential’s Vice President. He helps to keep the team organized and running smoothly. Prior to joining Green Residential, he spent 12 years working at Cadence Bank in the mortgage loan servicing department, where he specialized in loan audits, modifications, and bankruptcy-related issues for the mortgage portfolio.
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