Mortgage delinquencies are a good indication of the strength of a real estate market. That’s why San Antonio real estate investors are so pleased with CoreLogic’s Loan Performance Report for June. It shows that loan delinquencies and foreclosures are on their way down in San Antonio, indicating that the market is strong for homeowners and investors.
Take a look at the data, and get information about what this means for investors. Also, get the scoop on hot investments in San Antonio right now and what you need to do to grab those high-end renters. Then, you’ll be ready to hit the ground running with your San Antonio real estate investment.
National loan delinquencies declined 0.08 percent from June 2016 to June 2017, but San Antonio performed much better than the national average. The San Antonio-New Braunfels region saw a drop in delinquencies across the board.
Let’s start with delinquencies of 30 days or more. Over the course of a year, these delinquencies went from 3.3 percent to 2.7 percent. Serious delinquencies of 90 days or more went from 1.4 percent to 1 percent in June 2017. Those numbers show that San Antonio is trending in the right direction.
Foreclosures are also down in San Antonio. The foreclosure rate sat at 0.3 percent last year, but it’s down to 0.2 percent this year. That is a small change, but it also indicates that the market is growing stronger.
The low number of delinquencies and foreclosures has created a climate that’s very attractive to investors, especially those who are investing in rental properties.
San Antonio – The New Haven for Landlords
According to a list put out by TenX, San Antonio is the best market for investing in rental properties. This isn’t just because of the low delinquency rates. It also has to do with the strong population growth the city has experienced for the last six years, as well as the record-high payroll numbers.
There’s just one thing that can put a wrench in San Antonio’s booming real estate market.
Houston is going to need to rebuild after Hurricane Harvey, and that could derail building plans for San Antonio. Supplies and labor might have to be diverted to the city for months or even longer. That could slow construction in the city.
As of right now, though, that isn’t on the agenda. It looks like it is going to be business as usual in San Antonio, which means investors can expect a lot of growth.
While the growth could happen anywhere, it’s expected to hit a fever pitch when it comes to luxury real estate. Luxury real estate has never been hotter in San Antonio, and it’s expected to continue to heat up in the coming years.
Moving on Up in San Antonio
When a real estate market gets hot, luxury developers tend to move in. Hot markets mean people have money to burn, and they are putting that to the test in a big way with some new developments.
First, there is the Cellars. This opened last spring, and rent goes for around $3.14 a square foot. That’s nothing to turn your nose up at, but the Floodgate is going to be even more expensive. This new complex is located on the River Walk and is going to rent for around $4 a square foot. The units will be 900 to 2,400 square feet, so people need big bank accounts to stay here.
To put it in perspective, that’s what people pay to rent property in Boston. Boston is only behind San Francisco and New York when it comes to the most expensive rentals, so San Antonio is making a big move with these properties. It’s changing the way people think about San Antonio rental properties.
The rental prices are a big deal when you consider what luxury properties went for at the end of last year. Back then, the average cost for a luxury rental property was just $1.28 a square foot in the local market and $1.68 downtown. Places that rented for $2 a square foot were considered to be the most extravagant of the high-end properties, and it was questionable if the price point was sustainable. People weren’t sure if San Antonio renters were going to be willing to pay that much for the long term, but those critics have been silenced. It turns out people are willing to pay that and more if the property is right.
Why are people willing to pay so much? It comes down to amenities and status.
The amenities in these high-end properties are off the charts. Imagine living in a rental property with a rooftop pool, professional wine storage, spa, and concierge service. That’s just some of the amenities San Antonio renters are getting when they sign their rental agreements.
Then, think of the status that comes with living in that type of property. It’s actually to the point that people want others to know how much they spend on rent so they can achieve a higher status. It’s become a badge of pride. People are proud of spending $4 a square foot to live in the best of the best.
This has created a fantastic opportunity for landlords who want to rent to high-end tenants, but they should be smart about it. High-end renters aren’t the same as students or low-income renters. You must change the way you think about the process. Otherwise, you won’t be able to fill your luxury properties.
Renting High-end Real Estate
Successful landlords know there are eight steps involved in renting to high-end tenants. Follow these steps, and you can break out in the San Antonio luxury real estate market.
Step 1 – It Begins with the Property
San Antonio renters are willing to pay top dollar, but the property has to be right. You might not be able to pick up a property in the Floodgate or Cellars, but there are some other options. The Pearl area has lots of luxury options, and Agave Apartments is also known for its luxurious rentals. These price at around $2 a square foot, so while they aren’t as high-end as the Floodgate or Cellars, they’ll still allow you to tap into the luxury market.
Keep in mind that amenities are important to high-end renters. They want the very best of everything, including appliances. You can also add smart home technology and other features to make the property more appealing to high-end renters. The more luxurious you can make the property, the easier it will be for you to attract those high-end renters.
Step 2 – Act the Part
If you’re renting an apartment to college students, you can throw on a Dallas Cowboys sweatshirt and meet the prospective client. That’s not the case when you’re dealing with high-end renters. You need to look professional or you won’t get the tenant to sign on the dotted line.
It goes beyond the way you dress, too. You also must be organized and have a professional attitude. You’re asking these tenants for a lot of money. If you don’t seem like a pro, they won’t feel comfortable renting from you.
You aren’t just looking for a tenant. They’re looking for a landlord, and you’re going through an audition of sorts. Make sure you’re up to snuff so you can land the big fish. You have to seem more like a broker than a standard landlord if you’re going to fill luxury rentals.
Step 3 – Advertise to High-End Clients
You might get away with taking some pictures with your smartphone and throwing them on Craigslist and Facebook to find standard tenants, but that won’t work with high-end renters. You need to begin the process by taking some high-resolution photos and videos. You also need to write a listing that appeals to high-end renters. Talk about the experience and the status that comes with the rental. Remember, they want the status symbol that a luxury property offers.
Then, submit the property to as many listing services as you can, paying special attention to Trulia and other popular rental sites. When done correctly, your vacancy advertising will reach your customer base. Then you will generate some interest and be able to close the deal.
Step 4 – Be Willing to Negotiate
High-end renters enjoy flexibility. They have the money to buy a home, but they want to rent so they can move around if they desire. Some pick up the property as a second home, while others are considering moving at some point and don’t want to be locked into a mortgage. If you’re going to appeal to luxury renters, you need to be willing to negotiate. Some aren’t willing to sign long leases. Open yourself up to offering shorter leases so you can get a renter. Consider adding an upcharge to renters who don’t want to sign a long-term lease. Many will be willing to pay a premium to avoid signing a year-long lease. You will make more money in the short term, and the renter will have the added flexibility.
Step 5 – Credit Checks Are Still a Must
Some landlords mistakenly think they don’t need to run tenant credit checks on their high-end renters, but that’s never a good idea. You still need to pull tenant credit checks and background checks to make sure the tenant is who he or she claims to be. If the person does not want a credit check, have the tenant pay the entire lease amount upfront. Then, you will have your money and the tenant won’t have to get a credit check. This will protect you in case the renter is only pretending to be wealthy. It doesn’t happen often, but it does occur every once in a while, so you need to protect yourself.
Step 6 – Go Over Renter’s Insurance with the Tenant
High-end tenants have expensive belongings that they want to safeguard. Go over renter’s insurance options with your tenants so they will have all the necessary information. Remind them that your landlord policy doesn’t cover their belongings, so they should take out a policy just in case something happens. It’s always a good idea to provide tenants with the contact information for a few insurance agencies in case they want to go with a new company. You can also let them know that their insurance companies will likely add rental insurance to one of their existing policies.
Step 7 – Provide a Professional Lease Agreement
Some landlords get close to closing the deal, only to lose the person with the lease agreement. Tenants aren’t going to spend thousands of dollars a month if the paperwork doesn’t seem to be in order. Create a state-specific lease agreement for your tenants. Make sure it looks professional and legally binding. Failure to produce the right documents could cost you a tenant, so don’t make this mistake.
Step 8 – Collect Online Payments
High-end tenants don’t have the time to worry about paying their rent. They want it to be as easy as possible, so online rent collection is a must. Let your tenants set up auto-payments so they don’t have to think about the rent from one month to the next. Most of them will appreciate the ease that comes with online rent payments. They don’t want to go to the trouble of writing and mailing checks, so if you want to land high-end tenants, this is a must.
Are You Ready to Rent?
San Antonio is a great place for landlords. You don’t have to live in San Antonio or even Texas to take advantage of the hot rental market. Start by finding the perfect property, and then go through the steps to find and secure tenants.
Then, you can hold onto your investment and watch it grow for years to come. There is no reason to think the market is going to cool down anytime soon, so now is the time to jump in with both feet.