Hello, I'm new to investing, and with the current prices against current rents, I'm finding it difficult to get properties to cash flow. As far as I know, I am pretty thorough with the calculators. Is it just me? Or is it the current state of the market? Any advice would be appreciated. Thanks!
Hello, I'm new to investing, and with the current prices against current rents, I'm finding it difficult to get properties to cash flow. As far as I know, I am pretty thorough with the calculators. Is it just me? Or is it the current state of the market? Any advice would be appreciated. Thanks!
As David Greene would say, you truly have to create the value in a deal. EXample below:
I am a realtor and investor in the atlanta metro area. I purchased a home for $460k last year in a solid neighborhood that everyone wants to be in and that is steadily appreciating. If I were to rent it long term, I could expect to bring in about $2500 per month or $200 less than the PITI payment. I instead fully furnished it and have been renting it on airbnb and vrbo. It has been bringing in between $3300 and $6000 per month, effectively cashflowing and covering itself. It has also appreciated ~$50k in that time period.
If you look at properties through this lense and/or try to take on a rehab project you can still find deals.
With home prices being as high as they are, when I factor in the mortgage payment (P&I), it's been nearly impossible to find a cash flowing rental. Maybe these market conditions are less than ideal for LTR? Maybe I simply haven't found a good enough deal, I'm not sure. I am new to this and slowly learning but currently, my analysis is yielding the same conclusion as yours.
Hello, I'm new to investing, and with the current prices against current rents, I'm finding it difficult to get properties to cash flow. As far as I know, I am pretty thorough with the calculators. Is it just me? Or is it the current state of the market? Any advice would be appreciated. Thanks!
As David Greene would say, you truly have to create the value in a deal. EXample below:
I am a realtor and investor in the atlanta metro area. I purchased a home for $460k last year in a solid neighborhood that everyone wants to be in and that is steadily appreciating. If I were to rent it long term, I could expect to bring in about $2500 per month or $200 less than the PITI payment. I instead fully furnished it and have been renting it on airbnb and vrbo. It has been bringing in between $3300 and $6000 per month, effectively cashflowing and covering itself. It has also appreciated ~$50k in that time period.
If you look at properties through this lense and/or try to take on a rehab project you can still find deals.
Hello, I'm new to investing, and with the current prices against current rents, I'm finding it difficult to get properties to cash flow. As far as I know, I am pretty thorough with the calculators. Is it just me? Or is it the current state of the market? Any advice would be appreciated. Thanks!
As David Greene would say, you truly have to create the value in a deal. EXample below:
I am a realtor and investor in the atlanta metro area. I purchased a home for $460k last year in a solid neighborhood that everyone wants to be in and that is steadily appreciating. If I were to rent it long term, I could expect to bring in about $2500 per month or $200 less than the PITI payment. I instead fully furnished it and have been renting it on airbnb and vrbo. It has been bringing in between $3300 and $6000 per month, effectively cashflowing and covering itself. It has also appreciated ~$50k in that time period.
If you look at properties through this lense and/or try to take on a rehab project you can still find deals.
Correct me If I'm wrong but it sounds like this is not your primary. How are you planning to navigate the new ATL short term rental regulation?
Hello, I'm new to investing, and with the current prices against current rents, I'm finding it difficult to get properties to cash flow. As far as I know, I am pretty thorough with the calculators. Is it just me? Or is it the current state of the market? Any advice would be appreciated. Thanks!
As David Greene would say, you truly have to create the value in a deal. EXample below:
I am a realtor and investor in the atlanta metro area. I purchased a home for $460k last year in a solid neighborhood that everyone wants to be in and that is steadily appreciating. If I were to rent it long term, I could expect to bring in about $2500 per month or $200 less than the PITI payment. I instead fully furnished it and have been renting it on airbnb and vrbo. It has been bringing in between $3300 and $6000 per month, effectively cashflowing and covering itself. It has also appreciated ~$50k in that time period.
If you look at properties through this lense and/or try to take on a rehab project you can still find deals.
Correct me If I'm wrong but it sounds like this is not your primary. How are you planning to navigate the new ATL short term rental regulation?
It is not, but I do live in Atlanta. I short term rent my in law suite as well as the home I mentioned in the example above. I have received my STR license for both. I also manage an additional 6 short term rentals for other owners that I have helped navigate this process.
for me personally, I still want to continue to build up the short term rental portfolio, and I plan to buy in adjacent neighborhoods to atlanta (I.e. Marietta, Decatur, east point, hapeville, etc). Atlanta is still trying to figure out what the final rules will be around STRs, and once that has been finalized I have no doubt that someone will find a way to have more than 2 within city limits.
It depends on your location. In chicago A/B areas you can get 5-7% cashflow on almost any 4 unit, its getting that 10%+ etc thats harder. This is conservatively running cap ex etc. into the math. Dont fall for the really cheap areas where brokers put unrealistic cap ex numbers in pro forma. Remember a roof costs same price to replace on a $500k place as a $100k place.
Doing cosmetic updates at a minimum should boost rents and hopefully create some equity. I do a unit in my 4 unit airbnb and it gets my cashflow really high but is also a headache haha I may actually put it back to a annual lease.
It depends on your location. In chicago A/B areas you can get 5-7% cashflow on almost any 4 unit, its getting that 10%+ etc thats harder. This is conservatively running cap ex etc. into the math. Dont fall for the really cheap areas where brokers put unrealistic cap ex numbers in pro forma. Remember a roof costs same price to replace on a $500k place as a $100k place.
Doing cosmetic updates at a minimum should boost rents and hopefully create some equity. I do a unit in my 4 unit airbnb and it gets my cashflow really high but is also a headache haha I may actually put it back to a annual lease.
Managing an Airbnb is like managing a hotel but only 1 room..Can be a lot of work.
Hello, I'm new to investing, and with the current prices against current rents, I'm finding it difficult to get properties to cash flow. As far as I know, I am pretty thorough with the calculators. Is it just me? Or is it the current state of the market? Any advice would be appreciated. Thanks!
What are you basing on your calculations? In the most aggressive state of NJ I can find properties that cash flow. What are you including in the expenses? What are you using to base the rental income on? Forget things like maintenance reserves, vacancy loss, property management. Show us your #'s?
The days of easy pickins may be thinning, and now less experienced RE investors may benefit from expanding their knowledge and skills.
The RE market used to be pretty inefficient and imperfect, which created a lot of opportunity for those willing and able to exploit those inefficiencies. But, with the rise of technology (internet, Zillow, BP, etc, ), It has become more efficient and competitive, reducing the edge for investors.
So, to be competitive, you may need to expand your skills and find other options, like
* value added opportunities. Additions to smaller properties, develop land, build new houses, reconfigure existing obsolete floor plans, rehab rundown properties, etc
* Learn how to market to motivated sellers. If you think all RE investing is about looking on realtor.com or mls or having your agent bring you listed properties, you are myopic and need your vision adjusted.
* Do more of a deep dive in research, beyond your limited view. Maybe a different market has what you are looking for. Then develop your “local” team in those areas which may provide what you are looking for.
A great way to get cashflowing properties is to do a rehab/flip or 2 and then dump the profits in a rental where you want to own. Then, you don't have to worry as much about the CoC return on the rental, if you've "created" the downpayment from your flip.
Bottom line - limited thinking will get you limited results, stretch your brain……it hurts….but is worth it!
Of course, you don’t have to do any of this either and that’s fine, just realize it is a choice.
@Chris Kreslins I analyze probably 200 properties a day, and maybe one will cash flow. With that being said, most cash flow opportunities are created in today's market by adding value (construction). Right after the crash, all the BP crowd would look for 15% COC returns with 8% management fees baked, and and 10% vacancy. That doesn't exist anymore unless you are putting in a lot of work or taking over someone else' problem. No one wants to give away their property, so in a seller's market you have to figure out how to make deals work as a buyer.
It is for all the reasons listed above that I don't really buy long-term rentals anymore. I buy short-term rentals and I have doubled down on construction and development until the Market cycle changes. The getting is good in development so I figured might as well make hay while the sun shines. Got my GC license for builds.
to be fair, there are markets that cash flow around the country. They are in rural areas and such. Friend of mine in Arkansas is buying rentals at the same price the seller paid 30 years ago. Zero appreciation!
It is for all the reasons listed above that I don't really buy long-term rentals anymore. I buy short-term rentals and I have doubled down on construction and development until the Market cycle changes. The getting is good in development so I figured might as well make hay while the sun shines. Got my GC license for builds.
to be fair, there are markets that cash flow around the country. They are in rural areas and such. Friend of mine in Arkansas is buying rentals at the same price the seller paid 30 years ago. Zero appreciation!
Are you buying STRs in Nashville area? Where are you buying STR and how do they cash flow? I have a 1031 exchange that I need to invest from and am considering investing in the STR model.
It is for all the reasons listed above that I don't really buy long-term rentals anymore. I buy short-term rentals and I have doubled down on construction and development until the Market cycle changes. The getting is good in development so I figured might as well make hay while the sun shines. Got my GC license for builds.
to be fair, there are markets that cash flow around the country. They are in rural areas and such. Friend of mine in Arkansas is buying rentals at the same price the seller paid 30 years ago. Zero appreciation!
Are you buying STRs in Nashville area? Where are you buying STR and how do they cash flow? I have a 1031 exchange that I need to invest from and am considering investing in the STR model.
Thanks!
If you are looking for an STR property manager let me know.
I know of several STR opportunities in the Nashville area. Specifically allowing NOO STRs. Let me know if you are interested.....and get ready to spend some money.
Purchasing real estate at retail prices and renting them for cash flow is unheard of in a lot of markets. That's why people flock to cash-flowing cities like Memphis, TN and others.
The key to investing is purchasing the property under market value. If you have the deal, you can do anything you want. You can force the appreciation through property improvements then flip, BRRR, long-term rent, short-term rent, etc.
I think the right question is- how do you find a deal in 2022? I'd love to hear everyone's thoughts on that one!
@Chris Kreslins Rent a furnished property. Every deal I analyze has much better returns if furnished than not. In Austin I'm seeing a 15%-20% CoC increase and Cap rate increase 2x-3x.
Hello, I'm new to investing, and with the current prices against current rents, I'm finding it difficult to get properties to cash flow. As far as I know, I am pretty thorough with the calculators. Is it just me? Or is it the current state of the market? Any advice would be appreciated. Thanks!
I can't speak for your location but if I was to generalize how to cash flow in 2022 my response is 1. Be patient 2. Pursue properties that need improvements, whether cosmetic or major improvement (hence #1 -be patient). The properties should naturally be located in locations where the ARV will justify the $ needed to make the improvements 3. If possible to purchase with cash then refinance later to pull as much of your cash out of the deal as possible
@Corbin Loveless Everyone has heard the saying in real estate investing “You make your money when you buy” Your purchase price is the main factor that determines your profit. You can’t rely on an appreciating market, wishful thinking or construction coming in under budget to create your profit margin.
I'm finding a lot of properties through a homebuying website I set up with carrot.com and pushing traffic to the website via mailers, billboards, and all of my vans/work trucks are logoed up with the website domain.
You have to "kiss a lot of frogs!" I look at 20+ homes per week and make an offer on EVERY property lead. Even if it is WAY OFF what they are asking I ALWAYS make an offer. By doing this I'm able to buy some great cashflow properties, in an extremely competitive market.
My advise is stay diligent and make A LOT of offers!
Hello, I'm new to investing, and with the current prices against current rents, I'm finding it difficult to get properties to cash flow. As far as I know, I am pretty thorough with the calculators. Is it just me? Or is it the current state of the market? Any advice would be appreciated. Thanks!
Hi Chris. If your (or your realtor's) numbers are not showing at least 20% cash on cash returns, move on. There is still plenty of money to be made. For my clients, I target a minimum of 20% and usually hit closer to 30%+.
I know of several STR opportunities in the Nashville area. Specifically allowing NOO STRs. Let me know if you are interested.....and get ready to spend some money.
I know of several STR opportunities in the Nashville area. Specifically allowing NOO STRs. Let me know if you are interested.....and get ready to spend some money.
Thanks, Luka! Look forward to speaking with you and I hope all is well.
At this point in time, it’s hard unless you can buy with cash. My husband and I have some cash left from a refi and we realized that the stock market is tanking, so our opportunity to invest there and pause on properties. We are at the top of the real estate market. This will change but we will take a pause until then.