Looking at a San Antonio duplex or fourplex and wondering what a smart offer looks like today? You are not alone. With higher vacancy and big rent differences across submarkets, small-multifamily deals in 2025 reward careful underwriting. In this guide, you will get a step-by-step framework, local assumptions, financing paths, and a short checklist so you can evaluate with confidence. Let’s dive in.
What makes San Antonio unique now
San Antonio’s apartment market saw a jump in vacancy after a wave of deliveries. In Q2 2025, stabilized vacancy was about 11.5% and average effective rent was roughly $1,247 per unit marketwide, according to Cushman & Wakefield’s Q2 2025 report. The pipeline has started to moderate, but vacancy and concessions still matter.
Submarkets diverge materially. For example, Midtown rents in Q2 2025 were much higher than Westside averages in the same report. Use submarket comps for rents and vacancy instead of one metro average.
Cap rates widened in 2024–2025. Broker commentary places many San Antonio multifamily assets around the mid-single digits, with small, older B or C properties trading higher. See NorthMarq’s local commentary for context and expect a spread for small value-add deals.
A practical underwriting framework
Use this order of operations when you size up a duplex, triplex, or fourplex:
1) Gross potential rent
Multiply market rent by unit count and bedroom mix. Pull unit-level comps in the same submarket and condition.
2) Other income
Add laundry, parking, pet fees, storage, and appropriate fee income.
3) Vacancy and credit loss
Apply a vacancy allowance informed by current local data. With metro vacancy reported near 11.5% in Q2 2025, many small deals warrant a 7–12% underwrite and a sensitivity test using a 1–3 point swing. Source: Cushman & Wakefield Q2 2025.
4) Effective gross income
EGI = GPR + other income − vacancy and credit loss.
5) Operating expenses
Include taxes, insurance, owner-paid utilities, repairs, maintenance, landscaping, management, marketing, legal, and a replacement reserve. For underwriting references on management fees and reserves, see the Fannie Mae Multifamily Guide. Many small properties land near a 30–50% expense ratio, but age, utilities, and scale drive variation.
6) Debt service
Apply interest rate, amortization, and any lender coverage tests to calculate cash-on-cash and DSCR.
7) Value and returns
- Cap rate value: Value = NOI ÷ cap rate.
- Quick screen: GRM = Price ÷ gross annual rent.
- Returns: Show cash-on-cash and IRR for hold and value-add cases.
San Antonio inputs and quick examples
Here are common ranges to test on small-multifamily underwriting in San Antonio today:
- Vacancy allowance: 7–12% based on submarket conditions. Source: Cushman & Wakefield Q2 2025.
- Operating expense ratio: 30–50% of EGI for many small assets. Confirm with actuals.
- Management fee: 3–7% of EGI is common in underwriting references. Source: Fannie Mae Multifamily Guide.
- Replacement reserves: Many underwriting templates use a floor near $250 per unit per year. Older buildings need more. Source: Fannie Mae Multifamily Guide.
- Cap rates: Expect higher cap rates for small B or C properties than for newer institutional assets. Source: NorthMarq.
A quick GRM screen
Say a duplex has market rent of $1,200 per unit. That is $2,400 per month or $28,800 per year. If price is $350,000, GRM = 350,000 ÷ 28,800 = 12.15. Use GRM only as a fast filter. Always underwrite to NOI and cap rate.
Sensitivity snapshot for a 4‑plex
Assume 4 units at $1,200 rent, $50 other income per unit, taxes and expenses embedded in an expense ratio, and two cap rate scenarios. This is for illustration only.
| Scenario | Key inputs | NOI | Implied value |
|---|---|---|---|
| Base | 8% vacancy, 40% expense ratio, 6.75% cap | $33,235 | $492,000 |
| Conservative | 12% vacancy, 45% expense ratio, 7.50% cap | $29,198 | $389,000 |
Small swings in vacancy, expenses, or cap rate can move value by six figures. Always test multiple cases before you write an offer.
Financing paths that change the math
Owner‑occupied 2–4 units
Recent program updates have helped reduce down-payment barriers for owner-occupants on 2–4 unit properties. Fannie Mae details how borrowers may use rental income from other units and qualify with lower down payments in certain cases. Review current options in Fannie Mae’s overview of access-to-credit efforts. FHA also insures 1–4 unit owner-occupied purchases with low down-payment options, subject to county loan limits and property rules.
Investor loans and 5+ units
If you buy as an investor or step up to 5+ units, expect commercial terms focused on DSCR, reserves, and property condition. Agency small-balance programs are designed for 5–50 unit assets. See Freddie Mac’s Small Balance Loan materials for an overview of how these loans are underwritten.
Taxes, insurance, and zoning to check early
Property taxes
Effective property-tax burdens in Bexar County often run above the U.S. average, with local analysis showing many areas in the 1.6–2.1% range depending on taxing jurisdictions. Budget taxes carefully and plan for appraisal protests. Source: San Antonio Standard analysis.
Flood insurance
If a building is in a FEMA Special Flood Hazard Area, lenders must require flood insurance. Obtain a determination early. Premiums and required coverage can change the deal’s operating costs. See the Interagency guidance on flood insurance obligations.
Zoning and lot standards
San Antonio’s Unified Development Code defines duplex, triplex, and fourplex uses along with MF zoning districts and standards that can impact feasibility, parking, height, and unit count. Always confirm parcel-specific rules and overlays before assuming a conversion is allowed. Reference the City’s Unified Development Code.
Due‑diligence checklist
- Financials and leases: current rent roll with signed leases, last 12–24 months of operating statements, utility bills, insurance history, property-tax bills, repair receipts, and any inspection or engineering reports.
- Physical condition: licensed home inspection for 2–4 units, contractor estimates for roof, HVAC, plumbing, electrical, and a termite or pest report. For commercial or agency loans, plan on a Phase I ESA and a property condition needs assessment when required.
- Legal and compliance: confirm lease terms, deposits held, any month-to-month tenants, service contracts, outstanding code issues, and permitted uses or certificate of occupancy.
- Market checks: fresh rent and vacancy comps in the same submarket, current concession trends, and recent sales of similar 2–4 unit properties.
Exit strategies to model
- Hold for cash flow. Stress test for higher vacancy and interest rates.
- Value-add plus refinance. Improve units or operations, lift NOI, then refinance to lock better terms.
- Sell stabilized. Market to buy-and-hold investors once tenancy and operations are clean.
- 1031 exchange. Consider a like-kind exchange to defer capital gains if both properties qualify. Review basics in IRS Publication 544 and speak with your tax advisor.
- Condo conversion. Possible in select cases but legal and planning steps are significant. Engage the City and counsel early.
How the Abrahams TIES Team helps
You deserve disciplined, local guidance that blends residential and commercial know-how. Our team sources across single-family, small multifamily, and commercial channels, then helps you underwrite, negotiate, and manage the process with clear milestones. We flag zoning and tax considerations early, coordinate due diligence, and position your exit from day one.
If you are weighing a duplex, triplex, or fourplex anywhere in greater San Antonio, let’s build a clear underwriting and action plan together. Start your investor consult with David Abrahams today.
FAQs
What down payment do I need for an owner‑occupied duplex in San Antonio?
- Some conventional programs influenced by Fannie Mae allow lower down payments for owner-occupied 2–4 unit purchases, and FHA offers low down-payment options subject to county limits and rules; review Fannie Mae’s overview and confirm specifics with your lender.
What cap rate should I expect on a small fourplex?
- Local commentary shows mid-single-digit cap rates for many institutional assets, with older B or C small properties trading higher; use NorthMarq’s San Antonio notes as context and price to your submarket comps.
How should I budget reserves and big-ticket repairs?
- Many underwriting templates use a floor near $250 per unit per year for reserves, but older assets and known deferred items require more; see the Fannie Mae Multifamily Guide and align your reserve plan with a property condition assessment.
How big is property‑tax risk in Bexar County?
- Effective tax burdens often fall around 1.6–2.1% depending on taxing jurisdictions; build taxes into base underwriting and plan for annual appraisal reviews; source: San Antonio Standard.
How do higher vacancies affect small‑multifamily underwriting?
- With Q2 2025 stabilized vacancy near 11.5% metro-wide, model a 7–12% vacancy allowance and test 1–3 point swings to see how EGI and NOI move; source: Cushman & Wakefield Q2 2025.
