Real estate and other stuff

San Antonio has a diversified, growing economy and continues to add jobs. One of my favorite sectors as it relates to investment properties is the medical/biotech industry. Until recently, hospitals were located mainly downtown and biotech, research, schools, and other medical facilities were concentrated on the northwest part of the city at the South Texas Medical Center.

In my opinion, the Medical Center area has long been one of the best areas for investment properties because it attracts prospective tenants with well-paying jobs as well as students and interns the University of Texas Health Science Center. Methodist Hospital, Christus Santa Rosa, and ancillary clinics and doctors' offices are clustered in the area, which continues to expand north. The South Texas Oncology and Hematology and South Texas Accelerated Research Therapeutics are working together on the construction of a cancer treatment and research facility, with the planned opening at the end of this year. Other major employers, such as USAA and Valero Oil, are located nearby, as is the University of Texas at San Antonio, the second-largest UT campus.

But the gigantic planned community of Stone Oak is rapidly adding to its offerings of medical facilities, too. The new Methodist Stone Oak Hospital, set to open in the spring of 2009, will serve an area with a higher-income demographic in general than the Medical Center. Tenants are filling up the 81,000-square-foot  Plaza at Concord Park in Stone Oak. In addition, construction on the first medical office building in Agora Palms, a 69-acre mixed-use development next to Methodist Stone Oak Hospital, is under way.

The major difference between the two areas is in price. Many of the neighborhoods around the Medical Center are made up of older (than 20 years) and/or smaller (than 1500 square feet) homes that are priced at or under San Antonio's median price of $150,000. They are in Northside Independent School District, a well-regarded school district, as well as the fourth-largest in Texas. Over the last few months, single-family homes in the area of the Medical Center/UTSA/USAA have ranged in price from $100,000 to 7 times as much for homes near the prestigious Oak Hills Country Club. The average sold price is $160,000, and the median sold price is bang-on San Antonio's median of $150,000.

(5702 Charlie Chan, a 4-bedroom near the Medical Center available for rent by yours truly for $1,149/month)

The Stone Oak community is in North East Independent School District. The property tax rate in North East is a little higher, and (possibly as a consequence) there are more schools rated exemplary by the Texas Education Agency here than any other school district in San Antonio. In the last few months, the homes in Stone Oak (a much smaller market area than those around the Medical Center) ranged in price from $140,000 to the $600,000s, with an average sold price of $258,000 and a median of $249,000, and were brand-new to 20 years old.

An alterative to the high prices in Stone Oak, but still close to the medical facilities, is the Encino Park group neighborhoods located just on the other side of the east boundary of Stone Oak. Sold prices range from $140,000 to the high $300,000s, with the average being $221,000 and the median sold price $201,000. They are also located in North East school district, and range in age from new to the mid-20s, with most being under 10 years. Growth is continuing north along Highway 281 and new-home prices per square foot are naturally higher than those for resales, making these homes in an established neighborhood attractive.

(2831 Sierra Salinas, a 4-bedroom home I sold in 2006, located in Woods of Encino Park, which recently rented for $1,425)

Single-family homes tend to be located along a spectrum from income at one end to capital gains at the other. If you're strictly interested in cash flow, you may want to stay with the Medical Center area. In the middle of the spectrum, you could head farther west into the general area of Northwest Crossing and Braun Station, the attractive established neighborhoods that can also appeal to military residents from Lackland AFB to the west. If you want more high-income tenants or future buyers, growth, and future appreciation, Stone Oak might be what you're looking for, with Encino Park being in the middle of the spectrum.

One of San Antonio's largest employers, Fort Sam Houston, will be getting even bigger in the next few years: $1.5 billion bigger. Fort Sam (as it's known here) has 19 new buildings on the way, and another 4 buildings scheduled for renovation under the 2005 Defense Base Closure and Realignment Commission--somewhat ironically, since many San Antonians vividly remember the closure of Kelly AFB, another huge employer in the military city.

Fort Sam has a long history of caring for wounded soldiers. It is home to the Brooke Army Medical Center (BAMC), which is a Level 1 trauma center with a world-renowned Burn Ward. The Joint Center of Excellence for Battlefield Health and Trauma Research is the next project on the books. It broke ground last week and is scheduled to be completed by the end of 2009. The 150,000-square-foot facility is costing $92 million, and is only one of the new construction projects to support health training and battlefield care.

When all the dust has settled, 10,500 more people will be added to Fort Sam's payrolls, both military and civilian personnel. This means that San Antonio's need for housing in the north-central and northeast area of the city, both for rentals and primary homes for military personnel and their families relocating here, will continue to grow in the near future.

I collect old postcards from places I've lived and visited. Here's a nice one of the Fort Sam Quadrangle. I used to go there all the time to pet the deer and rabbits. The ducks and peacocks were harder to get close to.

We knew he lived under the deck and liked to dig holes in the mulch, looking for squirmy or crunchy meals, but we didn't know how BIG he was!

He (I say he, but it could be a she, I suppose) appeared the other day about 5:00 in the afternoon. He didn't seem too concerned about me creeping up on him with my camera until I got about 8 feet away. Then he took off at surprisingly high speed to another part of the yard close to the deck. I got even closer to him this time, shooting around the side of the deck. That's when I got this shot of him sitting up on his hind legs like a squirrel.

His name is Cisco. I think he's kinda cute.

A question asked recently by a new real-estate investor on a real-estate forum got me thinking. Should you expect your agent to send you the hottest deals the instant they appear? What about lowering their commission as your buyer's agent, since you may be buying (and possibly selling) several properties?

I disagree with many investors who think that there are no deals to be found on the MLS, that they are all FSBOs, wholesales, or REOs (which are also on the MLS). I've found plenty of deals on the MLS. The asking price is not the final sales price. Some sellers will negotiate. You have to read between the lines on the MLS listings to discern seller motivation. I could send out deals to various clients every day, but I honestly don't have the time to troll through all the listings (San Antonio is a big market) looking for possibilities and matching them to my various clients' requirements. So I set them up with an automatic notification of new/changed listings, and if they see one they're interested in, they let me know. Maybe that's lazy, but I preview listings on a regular basis, too. However, whenever I have sent out "blanket" e-mails of listings I have previewed, I have not gotten much response because my various investors were not ready to buy at that time. So my previews turn out to be in the nature of market research, not selling individual listings.

However, if you are looking for a specific kind of "hot deal" and are ready to make a move, I am certainly not going to slow you down. I'll spring into action and do the hands-on research, including previewing and taking photos if you're an out-of-town client. Some of my clients have never seen the properties they've purchased. Some of my clients have never seen ME.

Another fear that investors have is that agents are beating them to all the hot deals and scooping them up. This is very unlikely. The "average" real estate agent does 3-4 deals a year, and/or nets about $30,000. The really successful ones are too busy to be jumping on many properties. I see deals coming up all the time, as I said, but I can't buy everything I see. I average one or two rental properties a year. Like many investors, I got a real estate license partly in order to buy houses, not sell them; but I ended up becoming a Realtor to support myself and feed my habit!

As far as the customary 3% commission being negotiable, of course that's up to the individual agent and the circumstances. What can you give the agent in exchange for working with you at a lower pay rate than they could get working for someone else? What is the alternative--FSBOs? Foreclosures, REOs, and HUD homes? With many FSBOs, you're going to have to find the properties yourself and negotiate the price with the seller, who will likely overvalue the property based on numbers from Zillow. The FSBO seller is not going to instantly knock 6% off the price for you--they are selling the house themselves to avoid paying that commission.

Most REOs and HUD homes are sold by listing agents. If you represent yourself and avoid using a buyer's agent, the listing agent gets the buyer's agent commission as well, which can be up to 5% for HUD homes. Again, the seller is unlikely to reduce the price since they're paying the full commission one way or the other, just like a builder or lender would (so don't go there expecting a freebie either if you don't use an agent). And lender-owned properties are usually advertised at full market value--another reason to read between the lines on the MLS.

While many sellers aren't going to accept lowball offers (yet), especially from investors, who have gotten a bad name in many markets, don't give up on searching MLS listings for good deals. A professional buyer's agent will present your offer in the best possible light to the seller and do their best to make good deals that work for you.