Case Study: Buying a San Antonio Rental Property at Tax Deed Sale for $28,000

Most real estate investors dream of 10% cash-on-cash returns on rental properties. In this scenario, we follow an investor who buys a San Antonio house at a Bexar County tax deed sale for $28,000, puts $8,000 into targeted repairs, and generates $1,100 per month in rent — a 36% annualized cash-on-cash return.

This isn't a fluke. Tax deed sales in Texas routinely produce below-market acquisition prices, and San Antonio's East Side offers some of the best rent-to-price ratios in the state.

The Opportunity

San Antonio's East Side has been undergoing a slow-but-steady revitalization. While the neighborhood hasn't seen the explosive gentrification of Austin or Dallas, rents have been climbing steadily — driven by proximity to Fort Sam Houston, Randolph AFB, and the growing medical center corridor.

While reviewing Bexar County's tax delinquent list on LienSuite, the investor identifies a property scheduled for the upcoming tax sale:

• Property: 3-bed / 1-bath single-family, 1,050 sq ft
• Year built: 1962
• Lot size: 5,400 sq ft
• Years delinquent: 7 years
• Total tax debt: $18,400
• Appraised value (BCAD): $92,000
• Comparable sales: $85,000 - $110,000
• Comparable rents: $1,000 - $1,200/month

The property has been vacant for at least three years. The previous owner, an elderly woman, moved into a nursing facility and stopped paying taxes. The county filed suit, obtained a tax judgment, and the property is now set for a constable's sale.

The Numbers

The investor runs two analyses: one for a flip exit and one for a buy-and-hold rental strategy.

Flip Analysis

Item	Amount
Purchase at tax sale	$28,000
Rehab	$15,000
Holding + closing costs	$6,000
Resale value	$95,000
Flip profit	$46,000

Rental Analysis (the chosen strategy)

Item	Amount
Purchase at tax sale	$28,000
Rehab (rental-grade)	$8,000
Total cash invested	$36,000
Monthly rent	$1,100
Monthly expenses (taxes, insurance, maintenance, vacancy)	($420)
Monthly net cash flow	$680
Annual net cash flow	$8,160
Cash-on-cash return	22.7%

The investor chooses the rental strategy. While the flip would produce a one-time $46K profit, the rental generates $8,160 per year in passive cash flow — and the investor still owns a property worth $85K+ that will appreciate over time.

The Process

Step 1: Pre-Sale Research (2 Weeks Before)

The investor does thorough due diligence before setting foot in the courthouse:

Drive-by inspection: The house is rough but structurally sound. Pier and beam foundation with no visible settling. Roof appears to be about 8 years old — still has life left. Windows are intact. The main issues are cosmetic: peeling paint, overgrown yard, and a kitchen that hasn't been updated since the 1980s.

Title research: The investor checks Bexar County deed records and finds no additional liens beyond the tax judgment. No IRS liens, no mechanic's liens, no HOA dues (the neighborhood has no HOA).

Rental comps: Three properties within a quarter mile have rented in the past 6 months for $1,000, $1,100, and $1,200. All are similar vintage 3-bedroom houses. The $1,200 rental was newly renovated with granite counters — the investor sets a target of $1,100 for a clean but not luxury finish.

Flood zone: The property is in Zone X (no special flood hazard). No flood insurance required.

Step 2: The Tax Sale (Sale Day)

Bexar County tax sales happen on the first Tuesday of the month at the county courthouse steps. The investor arrives registered and with certified funds ready.

The opening bid is the judgment amount: $18,400 (total taxes, penalties, interest, and court costs). Bidding proceeds:

• $18,400 (opening)
• $20,000
• $24,000
• $26,000
• $28,000 (investor — winning bid)

The investor wins at $28,000 — roughly 30% of the property's fair market value. The competing bidders were looking for flip deals and dropped out when the margin got thinner. The investor, planning to hold as a rental, could justify a higher price because the return on investment comes from ongoing cash flow, not a one-time resale profit.

Step 3: Redemption Period (6 Months)

In Texas, the former homeowner has a 2-year right of redemption on homestead property and 6 months on non-homestead. Since the property was vacant and the former owner is in a nursing facility, the investor's attorney contacts the owner's family to gauge whether redemption is likely.

The family confirms they have no interest in redeeming. The former owner's medical expenses are substantial, and the family sees the tax debt as a burden. Still, the investor budgets conservatively and doesn't begin major rehab until the 6-month non-homestead period expires.

During the waiting period, the investor does minor work: clears the yard ($400), secures the property ($200), and gets contractor bids for the rehab.

Step 4: Rehab (Weeks 1-3 After Redemption)

Once the redemption period expires without challenge, the investor executes a focused, rental-grade rehab:

• Interior paint (entire house): $1,800
• Kitchen refresh (paint cabinets, new hardware, new faucet, new appliances): $2,200
• Bathroom refresh (new vanity, toilet, tile around tub): $1,400
• LVP flooring throughout: $1,600
• Electrical updates (GFCI outlets, new fixtures): $600
• Exterior cleanup and minor repairs: $400

Total rehab: $8,000. The investor deliberately avoids over-improving for the neighborhood. Granite countertops and stainless steel appliances would add cost without meaningfully increasing rent in this market segment.

Step 5: Tenant Placement (Week 4)

The investor lists the property at $1,100/month on multiple rental platforms. Within 10 days, they receive 14 applications. After screening (credit check, employment verification, landlord references), they select a tenant — a military family from nearby Fort Sam Houston with stable income and excellent references.

The tenant signs a 12-month lease at $1,100/month with a $1,100 security deposit.

The Result

Year 1 Performance

Item	Monthly	Annual
Gross rent	$1,100	$13,200
Property taxes	($150)	($1,800)
Insurance	($75)	($900)
Maintenance reserve (10%)	($110)	($1,320)
Vacancy reserve (5%)	($55)	($660)
Property management (self-managed)	$0	$0
Net Operating Income	$710	$8,520

Return Metric	Value
Total cash invested	$36,000
Annual NOI	$8,520
Cash-on-cash return	23.7%
Cap rate (on purchase price)	30.4%
Estimated equity	$49,000 ($85K value - $36K invested)
Payback period	4.2 years

A 23.7% cash-on-cash return — more than double what most rental property investors consider a "great" deal. And unlike a flip, this return repeats every year. In 4.2 years, the property will have paid for itself entirely through cash flow, and every dollar after that is pure profit.

Key Takeaways

1. Tax deed sales are the best acquisition channel for cash-flow rentals. Buying at 30-35% of market value means your rent-to-price ratio is exceptional from day one. You don't need leverage, appreciation, or luck to make the numbers work.
2. Don't over-rehab for the neighborhood. An $8,000 rental-grade rehab produced the same rent ($1,100) as a $15,000 flip-grade rehab would. Save the granite counters for neighborhoods where tenants will pay a premium.
3. Military tenants near bases are gold. San Antonio's military installations create a steady stream of reliable tenants with stable income, guaranteed by the U.S. government through housing allowances.
4. The rental strategy often beats the flip strategy on total return. A $46K flip profit sounds great, but $8,500/year in cash flow — plus equity appreciation — will exceed that flip profit within 6 years, and the income continues indefinitely.
5. Patience through the redemption period is essential. Don't dump $15K into a rehab before the redemption period expires. Do minor securing and maintenance, then go all-in once the title is clear.

How to Find Similar Deals

1. Monitor tax sale schedules using LienSuite's Texas tax sale calendar. Bexar County holds sales monthly.
2. Filter for rental-grade properties. On LienSuite, look for single-family homes in areas with strong rent-to-price ratios. San Antonio, El Paso, and mid-size Texas cities tend to offer better cash flow than Dallas or Austin.
3. Run your rental numbers before the sale. Know what comparable rents are, estimate your rehab, and calculate your minimum acceptable cash-on-cash return. Don't bid emotionally at the auction.
4. Research the neighborhood's tenant base. Proximity to military bases, hospitals, and universities creates stable rental demand. These neighborhoods are ideal for tax-sale rental acquisitions.
5. Start with one property. Buy one tax-deed rental, stabilize it with a tenant, learn the process, then repeat. Many investors build portfolios of 5-10 tax-sale rentals over a few years.

Looking for rental-grade properties at tax deed sales? Browse tax delinquent properties on LienSuite and sort by delinquency years to find long-neglected properties headed for sale.