It’s hard at first glance to understand that some of the city’s aging, rundown apartment complexes can be so attractive and profitable to out-of-town investors.
How can properties with units beset with plumbing leaks, contaminated with mold and made uninhabitable by broken air conditioners offer such a handsome return on investment? The formula, it seems, calls for screwing the tenants in a city where local officials appear slow to respond to such practices.
Journalism at its best allows a single reporter to make a real difference. San Antonio Report reporter Waylon Cunningham’s published accounts of the so-called Class C property sector in San Antonio, its ever-changing cast of avaricious owners, and the long trail of largely ignored tenant complaints of neglect, deferred maintenance and seemingly indifferent code enforcement should be required reading.
The entity expanding the fastest in the city, according to real estate data Cunningham cites, is Shippy Properties, an Austin-based investor-property management company that now owns more than 4,000 units in San Antonio. The stated strategy of David Shippy, the company’s founder and CEO who wrote a 2019 book touting his get-rich methods, involves buying up working-class apartment complexes, slashing maintenance costs and charging tenants added fees.
“I like to think of each apartment complex as a cash machine,” wrote Shippy in his book Money Matters for Financial Freedom: The Fast Path to Abundance in Life and Business.
For every new apartment unit that was built and ready to rent in San Antonio in 2021, there were almost three new rental leases being signed. Just over 4,000 units were built, but slightly more than 11,500 units were newly rented.
About 1 in 7 apartment units in San Antonio traded hands last year, a share greater than any city in the state and any city nationally except for Atlanta, according to a December report from CoStar, a real estate analytics firm. Those deals were worth a total of $3.6 billion in 2021, marking a near doubling over the transaction volume for 2019, before the pandemic.
Shippy’s crass business philosophy will come as no surprise to residents of one of San Antonio’s many rundown apartment complexes, but for those elected to lead this city, where a housing shortage has caused rents to soar and demand to outstrip supply, thus playing into the hands of unscrupulous landlords, there is an urgent need to address unacceptable living conditions that have only grown worse during the pandemic.
One obvious response is for city officials to dramatically beef up its team of building inspectors, with the intent to use persistent code enforcement and monetary fines to make property owners obey city ordinances and provide tenants with adequate housing. Once such fines start cutting into profits, otherwise uncaring landlords will respond.
Right now city staff relies on 311 telephone complaints from tenants to trigger a response. It should not be left to individuals to alert the city to unacceptable practices by investors driven only by the profit motive. City inspectors, backed by City Manager Erik Walsh who, in turn, should be vigorously backed by Mayor Ron Nirenberg and City Council, should take the initiative and make it clear to the offending property owners that inadequate housing practices will no longer be tolerated.
Even now, some tenants have been forced to move into local motels while the apartment owners in question escape serious consequences for their unacceptable practices.
City Councilwoman Ana Sandoval (D7) recently visited the infamous Seven Oaks apartment complex, one such substandard apartment complex in Northwest San Antonio, to gain a firsthand understanding of living conditions that no family should have to endure. She also met with displaced tenants at a nearby Motel 6.
Apartment management representing the Austin-based owner, Achieve Properties, responded by unsuccessfully attempting to have San Antonio Report Photo Editor Scott Ball’s vehicle towed to prevent him from taking photographs.
After her visit, Sandoval called on the city’s other elected leaders to act on the deplorable conditions she found at Seven Oaks. One can only hope a forceful and lasting response from the mayor and other City Council members is in the works.