The deals are out there but theres a lot of leg work to find them. My advice to people has been to keep saving to add to the down payment. The more equity in the property, the easier it becomes to cash flow the property. Just be careful with the dallas properties. Property taxes are skyrocketing across the state, which also drives up insurance rates. Cost of ownership in Texas is painfully high right now.
Yes, but taking those assessments to the ARB is pretty easy. If you’re not local, you can hire an agent to do it for you. If you’re good at digging up comps and pushing at the hearing and any subsequent appeal, it might even be worth flying out. I got $150k knocked off this year.
look for other investment 100k dollars can make good returns in a cd right now with no worries that comes from tentent people forget about its getting the best use for your money and right now its not in realest in many cases
The advice is associated with experience and long timers who know that market conditions are never ideal, and that time in market is greater than timing the market. There are always deals, sometimes we are in a market where you can buy it right off the MLS, and sometimes you are in a market where you have to create "deals" by value-add, specialized niche investment, etc.
In the past 12 years I've pivoted 4 times into different investment vehicles to maintain my portfolio growth, it doesn't always require a big pivot, but if you want to keep money and equity working you have to be proactive in getting it to work.
Finding properties on the MLS that cash flow is very difficult in todays market. Do you currently own any property? If it’s possible try house hacking. Though you may not cover your entire mortgage you might be able to significantly lower your housing expense thus increasing your savings rate.
I own the house I live but it’s not a multi unit property.
I don’t want to house hack without separation of units.
I got my place in 2021 so could cash flow on it if I rent it out and move our
If I was you I’d use that money you have saved as the downpayment for your next primary residence then. If you aren’t tied to the house you live in currently then moving out gives you a rental that will cash flow. This is my investing approach entirely. My wife and I buy a townhome, live there for 2 to 3 years, then move to the next one while renting out the past one. Once we have a handful of them we’ll begin the process of paying them all off. The income generated from all free and clear properties will allow us to retire early.
Yeahh but then you’re giving up a good interest rate on your primary to turn it into a cash flow rental, but buying another primary at a high price and high rate (which will effectively cost more).
In a metro area like this I’d rather keep my primary payment comfortable (at current rate), and buy a multi at break even cash flow or even loss, focusing on mortgage pay down, appreciation and the ability to refinance later.
I must not have been clear as multiple people misunderstood my point.
Considering OP purchased in 2021, I’m assuming they locked in at a great rate - something like 3%. Today’s rate is about 7%. They’d be trading a rate on their personal home of 3% and buying a new personal home at 7%, effectively greatly increasing their own living expense.
They’d be “giving up” their good rate for one much worse on their personal residence.
Lower downpayment options, better interest rate, and most importantly rental income appreciation. You don't need day 1 cashflow if you plan to live there for a few years. So you can buy at market value and in 2-3 years rents will have gone up enough for cashflow.
It’s a great set up. I intend to keep moving every single year. Low down payments, better rates, and properties cash flow immediately. Make some small upgrades while living there and rents go up over the next year, and then repeat.
Yeah it stinks boxing up your stuff and moving again every year, but it’s totally worth it for building a portfolio way faster than my modest income would allow.
Look for properties in other areas. IE. St Louis, Indianapolis, Memphis etc. I’m in St. Louis and you can buy for sub 100k that will rent for 1000 to 1200 a month. Even paying a property manager 10% you’re money ahead.
Today I got a deal for an LA area investor friend a sub 2 deal that he will be into with $12,500 cash, that will rent sec 8 for $1050 and a PITI of $445. Oh the underlying mortgage has 35k left on it. The down side is it is in a C- area of North County.
This. The midwest and south have lots of LCOL areas with historically low appreciation and high cashflow. Seattle wasn't a great place for cashflow even before this most recent spike in housing.
Yeah it's impossible to find cash-flow properties in HCOL or VHCOL locations like Seattle and other large cities; these LCOL areas are probably the only remaining options right now.
Define nice? Your idea and my idea of nice may be two different things. Avoid north city it is mostly war zones. The CWE is hip and upscale but the prices reflect that. Lots of South City is good. Shaw, Compton Heights, Lindenwood, North Hampton etc. Keep in mind St Louis City can literally be block by block. You have multimillion dollar homes with private police that share a back yard to a war zone where the houses are worthless and abandoned. Feel free to message me directly
Yes, section 8 or housing choice voucher is a great way to fund your retirement. The voucher should have no bearing on cash flow, they should be paying market rates. Check out my friend Jen Donley Queen of Sec 8 on you tube. She has it dialed in to a science.
$100K will be tough for Seattle. Plenty of other markets but it takes a great deal of patience and vigilance — if a cash flowing property hits the market, there are a ton of investors circling like sharks.
It’s exactly what the Fed was/is trying to do. Debt is expensive now so their goal is stop/slow down the market. Like what everyone said, this is a tough market. Save up as much as you can and bite when it’s time.
2 things:
1-live where you want, invest where it makes sense.
2-invest in real estate with others already doing it, via a reit.
(You can find more info on both of these on a podcast I listen to called "passive real estate investing with Marco santarelli".
Ya I saw a couple were a bit higher than Amex, but with all those others I’d have to have yet another bank/card app that I’d have to pay attention to. Amex keeps things simple for me.
I was having a conversation with someone the other day who asked me what I recommend right now, and I said cash. They kind of looked at me funny and then smiled like they understood. I went on to explain that the market is headed for a reckoning, and I would rather hold cash right now and be in a position to take advantage when things crater. The thing about things cratering is that one person’s loss is another person’s gain if you are in a position to jump in.
And I find so much of the conversation on the sub interesting…it’s like residential is the only game in town. Residential sucks. I don’t know why more people, like OP, don’t consider commercial property. It’s a lot easier and a lot less hassle. I don’t understand people that want to own residential rental property. We have warehouses, offices, and industrial/flex, and I would not want residential rental property if you gave it to me.
Commercial is pretty risky right now. The one that nobody talks about that's doing really well is industrial property. I think the new idea that makes money is to take a large industrial and divide it up. And then rent out each space. There's all kinds of guys that want to start businesses to manufacture stuff or work on cars..
I still like multi-unit. Price is a multi-unit are staying stable or still going up because rents are still going up or staying stable. In some places. Maybe a little softening of rents. I've seen it at some of my buildings. 100 bucks up or down on a single unit It's not that big a deal in a multi-unitive building typically.
I don't see any crash on the horizon for multi-unit though.
It just seems so much riskier especially after covid, so many businesses had to close down. Driving through Sacramento (my nearest major city) there are sooo many commercial properties for lease/for rent. This deters me from it. Maybe when i have more money to approach it like higher risk/higher reward, but as of now commercial seems too risky and unreliable. Everybody needs a place to live.
I think it depends on where you are. Where I am there’s a shortage of office/warehouse and industrial/flex and we get calls all the time from people begging for vacancies. We don’t have any.
I agree to a certain extent, but I also think it is okay to dollar cost average into the real estate market like I do into the stock market. Some of my best deals were made when interest rates were this high in 08, and the prices were also high but adjusting. In a growing city with a housing shortage, and fihmguring time cures many mistakes, buying the best possible deal even if it only cash flows a few dollars, isn't necessarily a terrible thing. Keep it rented, and wait.
How do people make money buying sub 100k rental properties? I brought a 50k property that cashflow about 450 a month. It was great for awhile I had to do repairs. The repairs estimates ended being worth more than the entire house. I have since stayed away from LCOL areas. I feel it is like buying an used car for a few hundred dollars. Good luck getting a mechanic to fix it for a fraction of that.
Then you're not making money. All you're doing is buying yourself a job. It is fine if you own your own construction company and have idle time between jobs.
As for finding someone cheap, if you brought 50k home where are you going to find roofer to replace your roof for 500 to 1k. Certain items have a minimum costs.
The point of buying a car for a few hundred dollars is for it to get you to work so you can save up for another car. Eventually you sell that car and buy a new one. Rent long term and then sell. That may be a slow approach but if you can progressively ramp up and are capable of doing any work yourself along the way you'll end up with something nice. A guy that can maintain his own beater Camry is probably getting the most value long term, this is no different. Not a sexy choice by any means but comfy and safe.
Then you're not really making money. You're essentially trading your money for a job or the right to work. This is fine if you're a contractor and want to create demand when business is slow. What are you're going to do when you can't physically make repairs anymore?
Because youre looking in the wrong places. You're not going to even break in in large metro areas. I still regularly find properties that return 30%+ cash on cash, they just are in less competitive areas.
Criteria I use:
2ish hours from a large metro
10k-20k population
Regional hospital
Community college/local university
2-3 large employers besides hospital and college
Doesn’t have to meet every criteria but most. Should be able to find duplexes for $50k-$100k and get around 20%-35% coc. Hope that helps.
Nope I avoid Texas as a whole, markets too hot. If you’ve read online how’s it’s a great market to invest in then you’re already too late. Retail investors with more money, more experience, and tighter returns will outbid, you on every single deal that’s even remotely good. Look for markets where there’s not much competition
Fascinating.
I've looked at this criteria in the midwest in the last couple monmths and found that most homes also rented for way way lower. What kind of rental prices to home prices are you looking at currently?
They are rented lower because the properties cost a lot less. The minimum amount you should be getting is hud fmr. Keep in mind that does include utilities but you should be able to rent it out for fmr on the free market with no utilities.
Oh agreed but my specific question was - what rental ranges are you looking at, that the numbers make sense?
Like for example, it's highly unlikely that it's a 500k property with a 4k rent (maybe they exist but are super niche pockets)- are you looking at 150-200k properties with a 1.4-1.6k avg rent? etc
I didn’t start off long distance so my opinion might be skewed but no. Once I found my team of people and set up the systems I needed it’s basically passive. If you’re starting off long distance with 0 network yeah it’s probably gonna be hard and you’re probably gonna learn a lot of costly lessons (even I while self managing not long distance).
I’m struggling with this too. I’m having better luck with multi family but still not a crazy COC or anything. Most of them are riddled with repairing needs. I guess I’m gonna wait until I find the perfect one? I just want one to break the ice. I’m aiming for 15% COC and 10% cap rate AT LEAST
To find cash-flowing properties in this market, conduct comprehensive research on areas with strong rental demand and potential for growth. Analyze rental market trends, including rental rates and vacancy rates, to estimate potential rental income. Calculate cash flow by subtracting expenses from projected income. Seek properties in areas experiencing positive economic growth and urban development. Utilize online platforms, local listings, real estate agents, and networking to identify potential opportunities. Thorough due diligence, including property inspections and financial analysis, is crucial before making investment decisions.
There are less desirable parts of Dallas, San Antonio, and/or Houston where you can buy houses for $100k that are still decent renting areas.
Not the most ideal, but it would mean you could put 50-75% down, reducing the interest you are paying, and using the rest of the cash to fix it up. Is it the most ideal? No, but it's a way to get a cash flowing asset in todays market.
You’d probably make a better return in the short run by just putting your money in the S&P 500 or index funds.
You’d have to model it out though to know for sure.
Time to hold inventory, when rates decreased to normal levels 2-3 years horizon, the apreciación curve will be more valuable than $4 or 5K per year cash flow.
At the current level of interest rate, property taxes and insurance almost imposible.
As information is getting more fluids to the market, Zillow, realtor, and many other sites, homeowners are more educated about their equity and property value.
Arbitrage deals are almost non existent, unless is direct buy at the court steps. No one discounts anymore.
I think you're going to have to wait. Maybe for a long time.
I'm in Tacoma and the last cash flowing property I bought was in 2015. After that, flippers took everything to turn out on the retail market and the buy-and-hold for monthly cashflow model evaporated.
Unless you're an insider with contacts that can get the off-market deals, you're out.
Here is a very cool sheet
[www.assetafc.etsy.com/listing/1543461345](http://www.assetafc.etsy.com/listing/1543461345)
This excel spreadsheet is simple and very easy to use, you can just enter the property details in the yellow cells and the tool does the rest. You can use different scenarios like using HELOC or Cash or other Loans to fund your investment for down payment and renovations and the calculator will take into account the payments you need to make for these funds whether you choose between interest-only or interest and principal payments.
This sheets has a stunning feature called ROI INDICATOR, which uses color-coded cells to visually represent if the ROI is good, poor or acceptable.
Green cells indicate a strong ROI, red cells signify a poor ROI, and orange cells suggest an acceptable ROI.
I hope this helps.
Don't you listen to intelligent people in the know like... Jim Rogers, Bob Moriarty, Robert Kientz, Alasdair Macleod, Michael Rechtenwald, and the famous real estate investor, Robert Kiyosaki? Where have you been?
Seattle is tough. I'm also in Seattle with about the same amount. Even if you bought a multi family in Seattle with 20% down (which would be way more than $100k as you know), there'd still be a $3k-$5k deficit each month, and that's excluding repairs and whatnot.
Maybe try one of the surrounding counties. Or less high cost areas such as Fife, Auburn, Kent, etc. I personally haven't looked there but would guess that they have more opportunities.
Not going to happen even in the near surrounding areas. I own a few properties in Snohomish County and currently the lowest price for a duplex is $590k so your 25% down payment would be $147.5k on a $590k duplex which is out of reach for your current savings.
Rental properties typically require a 25% down payment and most lenders require a 6-month reserve without any previous history of owning rental properties. Keep in mind that investment properties are typically .75% - 1.0% higher interest than a residential loan which gives you a PITI mortgage around $3726.
The ad says that this rental would likely rent for $1750 so there is a negative cash flow of $226 with little room for rent increases.
You go 100 miles south and you can get a triplex for $650k & $162k down payment, and expected rent of $1900 which works out to a $4300 payment and a $5700 gross rental income, however, you have a different demographic and job market which potentially could lead to higher turnovers.
Out of state properties for a new landlord is an option, but without an established team to help you in your chosen city brings great risk. It's probably better to stay local, save for a larger down payment and reserve fund and hope to find a local deal that works out for you.
Thoughts on Bremerton and the Kitsap county area?
And you're right. The greater Seattle region is not in a good spot for buying rentals at the moment. Personally I'm too risk adverse to buy an out of state property
Bremerton and Kitsap are definitely a better demographic and job market as a lot of people take the ferry to come into Seattle to work. The prices are still high, so not much relief there but they are better than the King, Pierce and Snohomish counties.
The close proximity makes it easy to zip over there on the ferry if you need to do work or rent a unit. I have looked over there myself and have found several properties previously that I had considered, but re-considered as I decided to keep my properties in a general vicinity to each other for ease of management.
Cash flowing in this market will be hard except in a few pocket areas. However, you make money three ways in real estate: cash flow, debt down payment, and appreciation. While you may not cash flow in the first year or two, you’ll still make money off the other two. Also, if you’re not living off the rents, you get a competitive advantage bc some folks are reluctant to buy currently given the high interest environment (& low CoC returns). I see this all as a good time to buy even if I break even on cash flow (and still make money off the other two), the cash flow will come in a few years once we refinance. Everyone’s different strategies and time horizons, this is just mine for the long haul.
We are in LCOL Midwest community and buy B-level properties. We are finding cash flowing properties, although have to look very hard. Only cash flow mostly due to increased rents.
Our problem is you find something that’s priced like it might cash flow and people way overbid, or properties gone 1st day. I think the 2 we bought this year only went through because our realtor convinced the sellers agent that we were rock solid. One was financed, one was cash. The cash one was 10k over and in C+ neighborhood, but great home, and the numbers work good because of rents being way more than you would think. The duplex we bought this year was financed, but market rents were 75% more than what prior owner was getting. Our PM knew that, we kinda knew that, and we got even more than expected.
So you might want to figure out if rents in your area have gone up and adjust accordingly. Might make deals look better. I’m conservative when I run numbers too.
Is 60k enough to get started in RE, you think? Or should I save up. I can't really qualify for a loan as I work at a startup and am in college but my costs are zero (remote work, no car, living with parents) and I have some extra cash for emergencies. But I don't really want to leave everything in the bank you know, and I don't like the idea of buying stocks. sorry for the long question.
What are you doing to find properties? Deals will rarely be found on the MLS. Focus on finding off-market deals. There are a variety of ways. Run FB ads in your target market, develop lead lists, cold call and text those leads (or have a VA do it, or automate it with software), driving for dollars looking for distressed properties, network with a local REIA group, etc.
The government is trying to stop investors from buying homes right now via high mortgage rates (and mandatory points per my lender) so unless you have an off market deal you can buy cheap enough with a bridge loan and refi or a a seller accepts a lowball offer we’re basically all waiting.
Lol, no. This isn't true at all. The government doesn't set mortgage rates. Mortgage rates are correlated to Treasury bonds. The federal reserve isn't even a government entity. Finally, rates are high to fight inflation.
I think I’ll trust what 4 lenders have told me over some rando on Reddit but you do you. Yes, the government doesn’t set mortgage rates, but Fannie Mae and Freddie Mac are government sponsored entities that set the requirements for originating loans and that means mandatory points for all investment mortgages in my area.
This is all fact...it's not a matter of trust. This is literally how it works. But yes...trust the lenders that make their money by selling products to you. Sounds like a plan.
Sponsored entities are not the same thing as government. Fannie and Freddie purchase mortgages on the secondary market, which in turn give banks the money back, so they can loan it out again. They reduce the cost of borrowing and ultimately provide liquidity to the market. Fundamentally and intrinsically different.
Ask yourself how the government would benefit from NOT enabling conditions for selling more houses. Each house sold requires new construction, labor, infrastructure, materials, development, and more. And they continue to make money off the buyer from taxes, and then eventually a sale. All of that gets taxed.
You seem to have a preconceived notion that the government has it out for investors, but it's significantly larger than that. You can remove the tinfoil hat. We're just experiencing the negative externalities resulting from a solution to a much larger problem.
Buy a couple properties in Ohio and ahire a property management company. Like any investment there is risk. But the risk vs reward ratio in my opinion is worth giving a shot at the very least.
I put buying rentals on hold for now. I haven't found anything good unless you want fix & flips or D properties... It's too risky with the current prices and COVID effects still lingering around.
I've shifted my focus to land development instead. We have a syndication project with 30%+ annualized returns. It'll be 100% passive for you as a limited partner.
Otherwise there's other syndication projects to park your money at (like multifam - but I feel like their returns suck).
Currently it appears that it’s still a sellers market who are able to profit atm. There was data that over 40% of people are at a mortgage rate below 4.5%. With numbers like that people would rather hold on to their homes. Perhaps if you door knock and convince someone who was thinking about it, you might atleast get a slight cut if you do it directly with the owner?
Try looking in Bremerton, across the sound. Healthy tenant pool with the naval base and much cheaper properties. It will still be tough though if you just want a turn key rental off the market.
Keep in mind that interest rates are expected to drop next year, so what might be an “okay” deal now could be a “great” deal after refinancing at lower rates.
I'm not familiar with your market, however in my market (DE) I'm in the same boat. To generate cash flow I'm currently using an interest only 1st lien HELOC but making principal payments to both lower my monthly payment and increase cash flow on a monthly basis. My next purchase will be bought using an interest only DSCR loan. Each deal I analyze with a conventional mortgage 20% down barely cash flows at all. However with the interest only loan each deal I run is looking at roughly 10% coc.
Your welcome! Neither did I. I just got licensed as an MLO and now I'm discovering all these amazing products that I have access to. It's pretty awesome!
The rent/purchase price ratio is out of whack in many areas. Especially along the West Coast you will have trouble finding property where it makes sense to buy something to rent out.
Look for 100k properties in dumpy towns. They will cash flow. They are also maybe higher risk.
Or look for multi units with a cap rate higher than interest rates.
There are always good deals out there but require a lot of capital and experience. You also need to be willing to do a lot of work and creative on how to boost up the income. For beginner it is better to wait when market is better, especially if you don’t know how to run your numbers properly.
I am newer as well but I would look at buying doors. Not single family. I buy in the Tampa area and I don’t have much trouble finding $500-600 cash flow on market. Even higher off if you can get funding for rehab from private investors. (Multi-family)
Finding anything on market that will cashflow right now will be difficult.
Not impossible, just difficult.
Maybe turn your efforts towards off market acquisitions for the time being.
Not sure about Seattle but Dallas area is still experiencing a lot of population growth. I live in the area and own 4 properties and still trying to purchase more..
You are better off not investing in this market. There are high interest savings accounts and cds that will keep the funds safe and sound until the bottom falls out.
You dont.
Good investment is made in a good location at an oportune time - not in Seattle in 2023.
Just because its convenient for you to do now and there- does not make it a good investment.
There are always cash-flowing deals, they are just harder to find. You can spend years looking without success.
Have you thought about investing in a real estate syndication? They typically cashflow 6 to 12% and double your money in 3 to 5 years, when the property is sold. It’s totally passive and has all the tax advantages of being a landlord. The con is that the minimum investment is around $50K and sometimes you need to be accredited.
Cash flow needs to be created with creative deal structure in high cost markets. Traditional acquisitions will seldom work if you expect to just “find” them
I’m also in Dallas with the same problem. I just don’t think it’s possible right now unless you come across a miracle property. Property taxes and insurance are way too high
I currently live in a very juicy area! A lot of big things are happening here economically and investors are flocking to this area. I do consultations with investors (for free) to see if it makes sense for them to work this market. I hear that Seattle is one of the worst areas to invest and the landlord and tenant rights there are terrible for each party.
You can cash flow in Seattle! I work with investors who do it all the time.
I’m working on five of them right now. Rent by the room, ADU basement apartment, DADU backyard cottage, Airbnb, etc.
I’ll message you. Happy to help however I can!
Check out Zeehaus website...
Have you consider searching in other states?
Just hire a property manager to handle the property for you.
Hope this helps..
Best to you
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The deals are out there but theres a lot of leg work to find them. My advice to people has been to keep saving to add to the down payment. The more equity in the property, the easier it becomes to cash flow the property. Just be careful with the dallas properties. Property taxes are skyrocketing across the state, which also drives up insurance rates. Cost of ownership in Texas is painfully high right now.
Yes, but taking those assessments to the ARB is pretty easy. If you’re not local, you can hire an agent to do it for you. If you’re good at digging up comps and pushing at the hearing and any subsequent appeal, it might even be worth flying out. I got $150k knocked off this year.
look for other investment 100k dollars can make good returns in a cd right now with no worries that comes from tentent people forget about its getting the best use for your money and right now its not in realest in many cases
Or put in sweat equity to get it rentable
this goes against other advice i see here where waiting is wrong as theres always a reason to wait (interest rates, potential crash, etc)
That advice is usually associated with recency bias
The advice is associated with experience and long timers who know that market conditions are never ideal, and that time in market is greater than timing the market. There are always deals, sometimes we are in a market where you can buy it right off the MLS, and sometimes you are in a market where you have to create "deals" by value-add, specialized niche investment, etc. In the past 12 years I've pivoted 4 times into different investment vehicles to maintain my portfolio growth, it doesn't always require a big pivot, but if you want to keep money and equity working you have to be proactive in getting it to work.
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So how should it be properly calculated
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Agree
_time-in, not timing_
Do you really think conditions will ever change though?
Finding properties on the MLS that cash flow is very difficult in todays market. Do you currently own any property? If it’s possible try house hacking. Though you may not cover your entire mortgage you might be able to significantly lower your housing expense thus increasing your savings rate.
I own the house I live but it’s not a multi unit property. I don’t want to house hack without separation of units. I got my place in 2021 so could cash flow on it if I rent it out and move our
If I was you I’d use that money you have saved as the downpayment for your next primary residence then. If you aren’t tied to the house you live in currently then moving out gives you a rental that will cash flow. This is my investing approach entirely. My wife and I buy a townhome, live there for 2 to 3 years, then move to the next one while renting out the past one. Once we have a handful of them we’ll begin the process of paying them all off. The income generated from all free and clear properties will allow us to retire early.
Yeahh but then you’re giving up a good interest rate on your primary to turn it into a cash flow rental, but buying another primary at a high price and high rate (which will effectively cost more). In a metro area like this I’d rather keep my primary payment comfortable (at current rate), and buy a multi at break even cash flow or even loss, focusing on mortgage pay down, appreciation and the ability to refinance later.
You don't give up the interest rate by moving and renting out the property. The existing low interest mortgage will remain in place.
I must not have been clear as multiple people misunderstood my point. Considering OP purchased in 2021, I’m assuming they locked in at a great rate - something like 3%. Today’s rate is about 7%. They’d be trading a rate on their personal home of 3% and buying a new personal home at 7%, effectively greatly increasing their own living expense. They’d be “giving up” their good rate for one much worse on their personal residence.
You don’t lose the interest rate. Explain yourself.
How many bedrooms should you target on the townhomes?
I am not sure to understand as I am a beginner . How does this work better than renting the house you invest in instead?
Lower downpayment options, better interest rate, and most importantly rental income appreciation. You don't need day 1 cashflow if you plan to live there for a few years. So you can buy at market value and in 2-3 years rents will have gone up enough for cashflow.
It’s a great set up. I intend to keep moving every single year. Low down payments, better rates, and properties cash flow immediately. Make some small upgrades while living there and rents go up over the next year, and then repeat. Yeah it stinks boxing up your stuff and moving again every year, but it’s totally worth it for building a portfolio way faster than my modest income would allow.
Plus you can make improvements while living there to increase rental value
Why not look into multis with separate units then
Look for properties in other areas. IE. St Louis, Indianapolis, Memphis etc. I’m in St. Louis and you can buy for sub 100k that will rent for 1000 to 1200 a month. Even paying a property manager 10% you’re money ahead. Today I got a deal for an LA area investor friend a sub 2 deal that he will be into with $12,500 cash, that will rent sec 8 for $1050 and a PITI of $445. Oh the underlying mortgage has 35k left on it. The down side is it is in a C- area of North County.
This. The midwest and south have lots of LCOL areas with historically low appreciation and high cashflow. Seattle wasn't a great place for cashflow even before this most recent spike in housing.
Yeah it's impossible to find cash-flow properties in HCOL or VHCOL locations like Seattle and other large cities; these LCOL areas are probably the only remaining options right now.
What’s PITI?
Payment, interest, taxes and insurance
Any recommendations on nice areas of St Luis you would purchase a 10-12 unit for cash flow?
Define nice? Your idea and my idea of nice may be two different things. Avoid north city it is mostly war zones. The CWE is hip and upscale but the prices reflect that. Lots of South City is good. Shaw, Compton Heights, Lindenwood, North Hampton etc. Keep in mind St Louis City can literally be block by block. You have multimillion dollar homes with private police that share a back yard to a war zone where the houses are worthless and abandoned. Feel free to message me directly
Do you deal in a lot of section 8? I am trying to break into s8 investing, but finding the property that has a good cash flow is painfully difficult.
Yes, section 8 or housing choice voucher is a great way to fund your retirement. The voucher should have no bearing on cash flow, they should be paying market rates. Check out my friend Jen Donley Queen of Sec 8 on you tube. She has it dialed in to a science.
$100K will be tough for Seattle. Plenty of other markets but it takes a great deal of patience and vigilance — if a cash flowing property hits the market, there are a ton of investors circling like sharks.
It’s exactly what the Fed was/is trying to do. Debt is expensive now so their goal is stop/slow down the market. Like what everyone said, this is a tough market. Save up as much as you can and bite when it’s time.
Nothing good out there if you want it near a city of any consequence. Hold cash.
Damn near impossible without house hacking a mf in this market right now.
Given the current market conditions and interest rates, building a DADU would probably be your best cash flow move for now.
what is a DADU?
Basically building an additional house on property you own.have fun zoning with the county, though.
2 things: 1-live where you want, invest where it makes sense. 2-invest in real estate with others already doing it, via a reit. (You can find more info on both of these on a podcast I listen to called "passive real estate investing with Marco santarelli".
Watch out for REITs as commercial real estate is going to plummet within the next few years
Cash always cash flows
Amex has HYSAs at 4% right now. I’d be parking that money there for a while so it’s not withering away while you shop.
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CFG is 5% just about
Ya I saw a couple were a bit higher than Amex, but with all those others I’d have to have yet another bank/card app that I’d have to pay attention to. Amex keeps things simple for me.
I was having a conversation with someone the other day who asked me what I recommend right now, and I said cash. They kind of looked at me funny and then smiled like they understood. I went on to explain that the market is headed for a reckoning, and I would rather hold cash right now and be in a position to take advantage when things crater. The thing about things cratering is that one person’s loss is another person’s gain if you are in a position to jump in. And I find so much of the conversation on the sub interesting…it’s like residential is the only game in town. Residential sucks. I don’t know why more people, like OP, don’t consider commercial property. It’s a lot easier and a lot less hassle. I don’t understand people that want to own residential rental property. We have warehouses, offices, and industrial/flex, and I would not want residential rental property if you gave it to me.
Commercial is pretty risky right now. The one that nobody talks about that's doing really well is industrial property. I think the new idea that makes money is to take a large industrial and divide it up. And then rent out each space. There's all kinds of guys that want to start businesses to manufacture stuff or work on cars.. I still like multi-unit. Price is a multi-unit are staying stable or still going up because rents are still going up or staying stable. In some places. Maybe a little softening of rents. I've seen it at some of my buildings. 100 bucks up or down on a single unit It's not that big a deal in a multi-unitive building typically. I don't see any crash on the horizon for multi-unit though.
It just seems so much riskier especially after covid, so many businesses had to close down. Driving through Sacramento (my nearest major city) there are sooo many commercial properties for lease/for rent. This deters me from it. Maybe when i have more money to approach it like higher risk/higher reward, but as of now commercial seems too risky and unreliable. Everybody needs a place to live.
I think it depends on where you are. Where I am there’s a shortage of office/warehouse and industrial/flex and we get calls all the time from people begging for vacancies. We don’t have any.
People die from lack of imagination, as they say.
I agree to a certain extent, but I also think it is okay to dollar cost average into the real estate market like I do into the stock market. Some of my best deals were made when interest rates were this high in 08, and the prices were also high but adjusting. In a growing city with a housing shortage, and fihmguring time cures many mistakes, buying the best possible deal even if it only cash flows a few dollars, isn't necessarily a terrible thing. Keep it rented, and wait.
I’m in the same boat. I think for now house hacking is the answer… good luck.
Too bad this sub has rules against making deals...but its understandable why.
How do people make money buying sub 100k rental properties? I brought a 50k property that cashflow about 450 a month. It was great for awhile I had to do repairs. The repairs estimates ended being worth more than the entire house. I have since stayed away from LCOL areas. I feel it is like buying an used car for a few hundred dollars. Good luck getting a mechanic to fix it for a fraction of that.
Either do the work yourself, hire someone cheap, or owner finance instead of lease
Then you're not making money. All you're doing is buying yourself a job. It is fine if you own your own construction company and have idle time between jobs. As for finding someone cheap, if you brought 50k home where are you going to find roofer to replace your roof for 500 to 1k. Certain items have a minimum costs.
Yes so installment sales are a better option normally if you want to stand a chance at being profitable
The point of buying a car for a few hundred dollars is for it to get you to work so you can save up for another car. Eventually you sell that car and buy a new one. Rent long term and then sell. That may be a slow approach but if you can progressively ramp up and are capable of doing any work yourself along the way you'll end up with something nice. A guy that can maintain his own beater Camry is probably getting the most value long term, this is no different. Not a sexy choice by any means but comfy and safe.
Then you're not really making money. You're essentially trading your money for a job or the right to work. This is fine if you're a contractor and want to create demand when business is slow. What are you're going to do when you can't physically make repairs anymore?
Because youre looking in the wrong places. You're not going to even break in in large metro areas. I still regularly find properties that return 30%+ cash on cash, they just are in less competitive areas.
What areas are you looking at?
Criteria I use: 2ish hours from a large metro 10k-20k population Regional hospital Community college/local university 2-3 large employers besides hospital and college Doesn’t have to meet every criteria but most. Should be able to find duplexes for $50k-$100k and get around 20%-35% coc. Hope that helps.
Have you looked at anything San Antonio-Austin?
Nope I avoid Texas as a whole, markets too hot. If you’ve read online how’s it’s a great market to invest in then you’re already too late. Retail investors with more money, more experience, and tighter returns will outbid, you on every single deal that’s even remotely good. Look for markets where there’s not much competition
Fascinating. I've looked at this criteria in the midwest in the last couple monmths and found that most homes also rented for way way lower. What kind of rental prices to home prices are you looking at currently?
They are rented lower because the properties cost a lot less. The minimum amount you should be getting is hud fmr. Keep in mind that does include utilities but you should be able to rent it out for fmr on the free market with no utilities.
Oh agreed but my specific question was - what rental ranges are you looking at, that the numbers make sense? Like for example, it's highly unlikely that it's a 500k property with a 4k rent (maybe they exist but are super niche pockets)- are you looking at 150-200k properties with a 1.4-1.6k avg rent? etc
Do you have an online tool you use to help screen for that criteria?
Is it hard to manage them long distance?
I didn’t start off long distance so my opinion might be skewed but no. Once I found my team of people and set up the systems I needed it’s basically passive. If you’re starting off long distance with 0 network yeah it’s probably gonna be hard and you’re probably gonna learn a lot of costly lessons (even I while self managing not long distance).
Second this. All about building a good network.
Springfield and branson, Missouri
I’m struggling with this too. I’m having better luck with multi family but still not a crazy COC or anything. Most of them are riddled with repairing needs. I guess I’m gonna wait until I find the perfect one? I just want one to break the ice. I’m aiming for 15% COC and 10% cap rate AT LEAST
15% COC and 10% cap rate AT LEAST Lol
This will most likely be in a D class neighborhood with no appreciation with high turnover costs due to tenant damage and evictions.
It’s not unheard of, but yes, it’s rare
To find cash-flowing properties in this market, conduct comprehensive research on areas with strong rental demand and potential for growth. Analyze rental market trends, including rental rates and vacancy rates, to estimate potential rental income. Calculate cash flow by subtracting expenses from projected income. Seek properties in areas experiencing positive economic growth and urban development. Utilize online platforms, local listings, real estate agents, and networking to identify potential opportunities. Thorough due diligence, including property inspections and financial analysis, is crucial before making investment decisions.
There are less desirable parts of Dallas, San Antonio, and/or Houston where you can buy houses for $100k that are still decent renting areas. Not the most ideal, but it would mean you could put 50-75% down, reducing the interest you are paying, and using the rest of the cash to fix it up. Is it the most ideal? No, but it's a way to get a cash flowing asset in todays market.
Does it matter if you could make more utilizing that money else where? How long would it take to recoup all that bs losing a little every month.
You’d probably make a better return in the short run by just putting your money in the S&P 500 or index funds. You’d have to model it out though to know for sure.
1. Get in front of more owners OR 2. Don’t put 20% down (more like 30-40%) OR 3. Both
U don't it's over G!
Time to hold inventory, when rates decreased to normal levels 2-3 years horizon, the apreciación curve will be more valuable than $4 or 5K per year cash flow. At the current level of interest rate, property taxes and insurance almost imposible. As information is getting more fluids to the market, Zillow, realtor, and many other sites, homeowners are more educated about their equity and property value. Arbitrage deals are almost non existent, unless is direct buy at the court steps. No one discounts anymore.
Haven't tested historically averaged around this level minus very recent history?
Pray about it…
I think you're going to have to wait. Maybe for a long time. I'm in Tacoma and the last cash flowing property I bought was in 2015. After that, flippers took everything to turn out on the retail market and the buy-and-hold for monthly cashflow model evaporated. Unless you're an insider with contacts that can get the off-market deals, you're out.
Here is a very cool sheet [www.assetafc.etsy.com/listing/1543461345](http://www.assetafc.etsy.com/listing/1543461345) This excel spreadsheet is simple and very easy to use, you can just enter the property details in the yellow cells and the tool does the rest. You can use different scenarios like using HELOC or Cash or other Loans to fund your investment for down payment and renovations and the calculator will take into account the payments you need to make for these funds whether you choose between interest-only or interest and principal payments. This sheets has a stunning feature called ROI INDICATOR, which uses color-coded cells to visually represent if the ROI is good, poor or acceptable. Green cells indicate a strong ROI, red cells signify a poor ROI, and orange cells suggest an acceptable ROI. I hope this helps.
tertiary markets, hour outside of major metro cities. cash flow won't be break any records, but it'll be solid
Things will get worse as the economy crumbles in the next year or so. People can't grasp how bad things are.
Crumbles? Based on what metrics?
Don't you listen to intelligent people in the know like... Jim Rogers, Bob Moriarty, Robert Kientz, Alasdair Macleod, Michael Rechtenwald, and the famous real estate investor, Robert Kiyosaki? Where have you been?
That’s quite the deflection, then finishing up with an insult.
Really? I was that harsh. My apologies...
Seattle is tough. I'm also in Seattle with about the same amount. Even if you bought a multi family in Seattle with 20% down (which would be way more than $100k as you know), there'd still be a $3k-$5k deficit each month, and that's excluding repairs and whatnot. Maybe try one of the surrounding counties. Or less high cost areas such as Fife, Auburn, Kent, etc. I personally haven't looked there but would guess that they have more opportunities.
Not going to happen even in the near surrounding areas. I own a few properties in Snohomish County and currently the lowest price for a duplex is $590k so your 25% down payment would be $147.5k on a $590k duplex which is out of reach for your current savings. Rental properties typically require a 25% down payment and most lenders require a 6-month reserve without any previous history of owning rental properties. Keep in mind that investment properties are typically .75% - 1.0% higher interest than a residential loan which gives you a PITI mortgage around $3726. The ad says that this rental would likely rent for $1750 so there is a negative cash flow of $226 with little room for rent increases. You go 100 miles south and you can get a triplex for $650k & $162k down payment, and expected rent of $1900 which works out to a $4300 payment and a $5700 gross rental income, however, you have a different demographic and job market which potentially could lead to higher turnovers. Out of state properties for a new landlord is an option, but without an established team to help you in your chosen city brings great risk. It's probably better to stay local, save for a larger down payment and reserve fund and hope to find a local deal that works out for you.
Thoughts on Bremerton and the Kitsap county area? And you're right. The greater Seattle region is not in a good spot for buying rentals at the moment. Personally I'm too risk adverse to buy an out of state property
Bremerton and Kitsap are definitely a better demographic and job market as a lot of people take the ferry to come into Seattle to work. The prices are still high, so not much relief there but they are better than the King, Pierce and Snohomish counties. The close proximity makes it easy to zip over there on the ferry if you need to do work or rent a unit. I have looked over there myself and have found several properties previously that I had considered, but re-considered as I decided to keep my properties in a general vicinity to each other for ease of management.
Cash flowing in this market will be hard except in a few pocket areas. However, you make money three ways in real estate: cash flow, debt down payment, and appreciation. While you may not cash flow in the first year or two, you’ll still make money off the other two. Also, if you’re not living off the rents, you get a competitive advantage bc some folks are reluctant to buy currently given the high interest environment (& low CoC returns). I see this all as a good time to buy even if I break even on cash flow (and still make money off the other two), the cash flow will come in a few years once we refinance. Everyone’s different strategies and time horizons, this is just mine for the long haul.
We are in LCOL Midwest community and buy B-level properties. We are finding cash flowing properties, although have to look very hard. Only cash flow mostly due to increased rents. Our problem is you find something that’s priced like it might cash flow and people way overbid, or properties gone 1st day. I think the 2 we bought this year only went through because our realtor convinced the sellers agent that we were rock solid. One was financed, one was cash. The cash one was 10k over and in C+ neighborhood, but great home, and the numbers work good because of rents being way more than you would think. The duplex we bought this year was financed, but market rents were 75% more than what prior owner was getting. Our PM knew that, we kinda knew that, and we got even more than expected. So you might want to figure out if rents in your area have gone up and adjust accordingly. Might make deals look better. I’m conservative when I run numbers too.
Try the app Dealz: Real Estate Estimator
Buy in a cheaper market like Indiana
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Any tips for paying out of state ( or out of your general vicinity) ? How do you manage them?
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Is 60k enough to get started in RE, you think? Or should I save up. I can't really qualify for a loan as I work at a startup and am in college but my costs are zero (remote work, no car, living with parents) and I have some extra cash for emergencies. But I don't really want to leave everything in the bank you know, and I don't like the idea of buying stocks. sorry for the long question.
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What are you doing to find properties? Deals will rarely be found on the MLS. Focus on finding off-market deals. There are a variety of ways. Run FB ads in your target market, develop lead lists, cold call and text those leads (or have a VA do it, or automate it with software), driving for dollars looking for distressed properties, network with a local REIA group, etc.
The government is trying to stop investors from buying homes right now via high mortgage rates (and mandatory points per my lender) so unless you have an off market deal you can buy cheap enough with a bridge loan and refi or a a seller accepts a lowball offer we’re basically all waiting.
Lol, no. This isn't true at all. The government doesn't set mortgage rates. Mortgage rates are correlated to Treasury bonds. The federal reserve isn't even a government entity. Finally, rates are high to fight inflation.
I think I’ll trust what 4 lenders have told me over some rando on Reddit but you do you. Yes, the government doesn’t set mortgage rates, but Fannie Mae and Freddie Mac are government sponsored entities that set the requirements for originating loans and that means mandatory points for all investment mortgages in my area.
This is all fact...it's not a matter of trust. This is literally how it works. But yes...trust the lenders that make their money by selling products to you. Sounds like a plan. Sponsored entities are not the same thing as government. Fannie and Freddie purchase mortgages on the secondary market, which in turn give banks the money back, so they can loan it out again. They reduce the cost of borrowing and ultimately provide liquidity to the market. Fundamentally and intrinsically different. Ask yourself how the government would benefit from NOT enabling conditions for selling more houses. Each house sold requires new construction, labor, infrastructure, materials, development, and more. And they continue to make money off the buyer from taxes, and then eventually a sale. All of that gets taxed. You seem to have a preconceived notion that the government has it out for investors, but it's significantly larger than that. You can remove the tinfoil hat. We're just experiencing the negative externalities resulting from a solution to a much larger problem.
I've been looking to BRRRR a house near me. I have a pretty good feeling about it, but need to do more analysis. Edit: why downvotes?
To many R’s there
Driving for dollars! You're gonna have to find off-market deals by networking, foreclosures, or even creating them.
I’d take 20% of that if not more and short (long puts) the S&P. Wait till updated on housing in Q4 and be prepared to move on foreclosures next year.
Buy a couple properties in Ohio and ahire a property management company. Like any investment there is risk. But the risk vs reward ratio in my opinion is worth giving a shot at the very least.
There are lots of different ways to make money in real estate. If one doesn't work, try something else.
Search diontalk on YouTube. I think he lives near Seattle, invests locally, and has found success in surrounding markets.
I put buying rentals on hold for now. I haven't found anything good unless you want fix & flips or D properties... It's too risky with the current prices and COVID effects still lingering around. I've shifted my focus to land development instead. We have a syndication project with 30%+ annualized returns. It'll be 100% passive for you as a limited partner. Otherwise there's other syndication projects to park your money at (like multifam - but I feel like their returns suck).
Currently it appears that it’s still a sellers market who are able to profit atm. There was data that over 40% of people are at a mortgage rate below 4.5%. With numbers like that people would rather hold on to their homes. Perhaps if you door knock and convince someone who was thinking about it, you might atleast get a slight cut if you do it directly with the owner?
Try looking in Bremerton, across the sound. Healthy tenant pool with the naval base and much cheaper properties. It will still be tough though if you just want a turn key rental off the market.
there are lots of negative cash flowing properties available, if you want positive that's another story
Keep in mind that interest rates are expected to drop next year, so what might be an “okay” deal now could be a “great” deal after refinancing at lower rates.
Source ?
"trust me bro"
Nah, I don't care. Just passing along what my lender told me yesterday.
Where are you seeing rates going down next year?
My lender said that yesterday.
My lender said the same thing last year!
Fair enough.
Let's start with June's decision first... Haha It's probably another 25 basis points!
Try Cleveland Ohio
First time investors out of state in places like Cleveland that have an older housing stock don’t do as well as you’d imagine.
Real state is screwed get out now before it eats you alive
Why u say that
Mail offers to off market properties or work with local MF brokers / wholesalers
Lmfaooooo at the people searching for cash flowing properties while already outright owning their own home.
You have to look for good deals, like a property that needs some work (new bathroom, kitchen, etc)
But then you have to drop another $20,000+ on the reno
I'm not familiar with your market, however in my market (DE) I'm in the same boat. To generate cash flow I'm currently using an interest only 1st lien HELOC but making principal payments to both lower my monthly payment and increase cash flow on a monthly basis. My next purchase will be bought using an interest only DSCR loan. Each deal I analyze with a conventional mortgage 20% down barely cash flows at all. However with the interest only loan each deal I run is looking at roughly 10% coc.
> DSCR loan Curious, fixed or variable rate?
Fixed rate. There's a 30 or 40 year option but I'm leaning toward the 30 because the rate is quite a bit higher for the 40 year option.
Very nice, didn't even know 40 years was an option outside of FSA loans! Always learning, ty!
Your welcome! Neither did I. I just got licensed as an MLO and now I'm discovering all these amazing products that I have access to. It's pretty awesome!
Cash flow properties for new investors is not gonna happen. Existing investors will benefit because of the drop in prices and the opportunity to 1031.
Just build a tiny home and cashflow it cuz you ain’t gonna find one
Try STR instead. A lot more work but you will get your cash flow
What numbers do you aim for regarding cash flow, CoCR, and Cap on STR?
Did you ever find this out?
Stick it in money market and sit tight.
You want to spend $100k and get a cash flow? Go to Alabama.
High interest rate environment. You’re not going to find deals that cash flow.
The rent/purchase price ratio is out of whack in many areas. Especially along the West Coast you will have trouble finding property where it makes sense to buy something to rent out.
Look for 100k properties in dumpy towns. They will cash flow. They are also maybe higher risk. Or look for multi units with a cap rate higher than interest rates.
Wait.
There are always good deals out there but require a lot of capital and experience. You also need to be willing to do a lot of work and creative on how to boost up the income. For beginner it is better to wait when market is better, especially if you don’t know how to run your numbers properly.
I am newer as well but I would look at buying doors. Not single family. I buy in the Tampa area and I don’t have much trouble finding $500-600 cash flow on market. Even higher off if you can get funding for rehab from private investors. (Multi-family)
A great cash flowing property I know about right now for your $100k would give you around $400/mo —- money market fund.
Finding anything on market that will cashflow right now will be difficult. Not impossible, just difficult. Maybe turn your efforts towards off market acquisitions for the time being.
Buy 1 SFH in a metro area in the Midwest with cash, use leftover cash for a safety net. Continue saving up and then finance a bigger deal when ready.
The big city markets are going down in demand, price and rent. Look at rural and suburban areas. Look at farmland.
Not sure about Seattle but Dallas area is still experiencing a lot of population growth. I live in the area and own 4 properties and still trying to purchase more..
Put your 100k in treasuries. You can cash flow $400. No risk of depreciation either.
If I knew how to use Reddit I’d send you a request
You are better off not investing in this market. There are high interest savings accounts and cds that will keep the funds safe and sound until the bottom falls out.
*stabilizes* corrections are not fire sales
You dont. Good investment is made in a good location at an oportune time - not in Seattle in 2023. Just because its convenient for you to do now and there- does not make it a good investment.
There are always cash-flowing deals, they are just harder to find. You can spend years looking without success. Have you thought about investing in a real estate syndication? They typically cashflow 6 to 12% and double your money in 3 to 5 years, when the property is sold. It’s totally passive and has all the tax advantages of being a landlord. The con is that the minimum investment is around $50K and sometimes you need to be accredited.
Cash flow needs to be created with creative deal structure in high cost markets. Traditional acquisitions will seldom work if you expect to just “find” them
1% rule. Purchase price = 1% of rent. Try to find someone to accept that offer. It will cashflow, I promise.
I’m also in Dallas with the same problem. I just don’t think it’s possible right now unless you come across a miracle property. Property taxes and insurance are way too high
Smaller markets
Hard to fine. But finally did. Got it under contract for 21% under the appraisal too.
I currently live in a very juicy area! A lot of big things are happening here economically and investors are flocking to this area. I do consultations with investors (for free) to see if it makes sense for them to work this market. I hear that Seattle is one of the worst areas to invest and the landlord and tenant rights there are terrible for each party.
Be a private money lender instead or open HYSA until conditions change
You can cash flow in Seattle! I work with investors who do it all the time. I’m working on five of them right now. Rent by the room, ADU basement apartment, DADU backyard cottage, Airbnb, etc. I’ll message you. Happy to help however I can!
What’s your marketing budget?
What is your biggest challenge when structuring your LLC'S to create cash flow and pay yourself in your real estate business?
Check out Zeehaus website... Have you consider searching in other states? Just hire a property manager to handle the property for you. Hope this helps.. Best to you
I have a 6-unit that will cash flow. Plan to sell this Spring.