With our current New Braunfels / San
Antonio duplexes and homes, the high ratio of rent
To sales price provides a positive cash flow in most
APPRECIATION - INCREASE IN VALUE OVER
In the New Braunfels and
San Antonio Metro area, we have had an
increase in value of approximately 4.4%
per year in the median price of duplexes
and homes. Starting at
$63,000 (January 1990) to $178,800 (June
2013) - a period of 23 1/2 years.
This shows a stable long term increase
in value and a substantial increase
in equity over 5, 10 and 15 years.
(see Texas A&M real estate website:
Each month your tenants make
rent payments to cover the mortgage payment that
reduces the amount of the principal loan.
Over time the principal reduction becomes a
significant amount of equity in your
On the sale or tax free
reinvestment of your property, your gross equity
will be returned in three ways:
Appreciation - increase in value over time
(See #3 above)
Return of your original down payment
Principal reduction (See #4 above)
- - - - -
TAKE AWAY - -
- - -
renters are paying off your
mortgage, paying your taxes,
insurance and expenses & giving you
an up-front positive cash flow.
HOW TO RECOGNIZE
AND SELECT A GOOD REAL ESTATE MARKET
YES, IT'S LOCATION, LOCATION, LOCATION
THE TYPE OF MARKET NEEDED TO MAXIMIZE YOUR
INVESTMENT IN RESIDENTIAL REAL ESTATE
A GOOD REAL ESTATE MARKET HAS:
1. CASH FLOW BEFORE TAXES:
Rent income high enough to produce a positive
2. THE BUILD UP OF EQUITY OVER TIME;
Similar to a savings account with deposits made
year after year.
3. LOCATION--- THE RIGHT NEIGHBORHOOD
GUIDELINES TO THE SELECTION OF THE BEST
1. THE FIRST GUIDELINE--- FOR CASH FLOW:
Formula: If the monthly rent income is in
the area of 1% of the purchase price of the
property, in most cases, this will cover
principal, interest, taxes, insurance and other
expenses resulting in a positive cash flow month
after month for the investor.
Example: $1,000 of monthly rent is 1% of
purchase price of $100,000
2. THE SECOND GUIDELINE--- FOR EQUITY BUILDUP
Equity is accumulated by Appreciation Gains
and Principal Reduction added to the
Formula: The market must have long
term appreciation stability.
Example: If the annual appreciation rate for a
market has been 4% to 8% for 15 to 20 years then
it is likely that that rate will continue for
the future producing a significant amount of
equity in the property. What is to be avoided
is a BUBBLE UP of 20% to 30% of annual
appreciation and then a BUBBLE DOWN of
20%--30% of annual depreciation.
3. THE THIRD GUIDELINE--- LOCATING THE RIGHT
Look at the schools, services and shopping
Not all neighborhoods in a good market will
Do your homework to locate your
Selected locations in the San Antonio New
Braunfels Metro area
are excellent for new duplex and single
family home investments.
the Texas A & M Real Estate Center that give
data on why the Texas Economy will support
residential real estate investment through 2050:
"Wanted: Housing for 30 Million More Texans"
"Nine Reasons to Invest in Texas" Oct 2011
"The Amazing Rate" July 2013
"Land, Lots of Land" July 2013
"Crude Awakening: Oil, Gas Jobs in Play"
"Bubble Radar" July 2011