Hey Guys, I'm currently looking for my first small multifamily rental property investment and to me the number one criteria is solid cashflow. What are markets that I can find these in? What advice do you have for me?
You can find cash flowing properties in any market however I recommend starting to invest in your own market. House hacking would be a great way to get started if that works for you.
You can find cash flowing properties in any market however I recommend starting to invest in your own market. House hacking would be a great way to get started if that works for you.
@Levi Backman Paul is giving good direction, here. Househacking is the way to go. My first househack was a single family home I lived in and rented to a friend for $500/m. My second property came a few years later out of the proceeds from the sale of that house and I now collect $1,500/m from the upper unit of my duplex. In my first house hack, my cost of living was around $500 per month after collecting that rent, and now in this one it's $300. When I move out and rent it I'll cash flow ~$600/m after expenses. The cost of living reduction is so huge. imagine having a property that cash flows 400/m but you're paying 1500/m in market rent, haha. it's just not even in the same ballpark. owner-occupants get much better financing options and terms, and if you live in a property 2 of the last 5 years you can sell with no capital gains on the part you lived in. Just some food for thought :) good luck!
Thanks for the responses. House Hacking does't make sense for me because I currently don't have to pay for a residence. The problem with my market is that I live near Boston and have yet to find a cash flowing property with a reasonable price. I'm looking to use creative financing to finance my first deal. ( seller financing or lease option)
You'll want to network with agents and wholesalers to find those deals off market. In my experience seller financed/lease option deals are not found on the MLS.
Thanks for the responses. House Hacking does't make sense for me because I currently don't have to pay for a residence. The problem with my market is that I live near Boston and have yet to find a cash flowing property with a reasonable price. I'm looking to use creative financing to finance my first deal. ( seller financing or lease option)
well, I wouldn't rule it out solely on not having to pay for a residence. Hear me out :) These are a few of the benefits i've experienced while house hacking that I think may be on par or even exceed the benefit of cost of living reduction:
1.) I learned how to be a landlord while I had more control living in the property. This includes tenant management, screening, etc. I could never imagine just blindly paying someone to do this for me had I not learned how to do it myself. Being there was just so much easier, as I could tackle issues before they were bigger problems and learn what I need to pay attention to. 2.) I get to benefit from the 2/5 rule. Live there for 2 of the last 5 and if you decide to sell you don't pay capital gains. 3.) This is probably the best one...I could force equity by making improvements while I live there. this is where I probably earned most of my money in my first two househacks. 4.) This is pretty specific to me, but, I was able to share that I house hack with other people I work with and that helped me establish rapport with other investors and clients I work with today. 5.) as an owner-occupant, I got great loan terms and got to purchase a more valuable asset because I got credit for the rent as qualifying income. This is a pretty insane benefit. I also got access to really low % down payment options because i was living there. This could be huge for you, given your high cost market being a barrier to entry.
Hope this helps. I think it's pretty important to learn how to manage a property and tenants yourself before you hire a PM or try to do it when you're not there to see it and be around it and really get to know your property while you're new to the game. If you're not into it, it is what it is and that's obviously a very personal choice!
You'll want to network with agents and wholesalers to find those deals off market. In my experience seller financed/lease option deals are not found on the MLS.
this is right, and you'll waste more time waiting and trying to find one than it's worth in lost appreciation. It's often not in a seller's best interest to sell this way, I don't see it happening until the market shifts far more into the buyer's control. maybe it'll happen, but you'll be waiting and waiting for this.
Hey @Levi Backman, Oklahoma City is still a cash flow market in certain areas. I've also heard good things about Ft. Smith, AR and Lawton, OK along with markets in Illinois, Indiana and Ohio. I'd find the biggest wholesalers in several markets and see about getting on their email lists. That will school you up on current values, ARV, potential rents, etc.
But I'd echo the sentiments above. A house hack is always the best first real estate investment. You don't know all the stuff you don't know. And you'll learn a ton of it with a house hack.
@Levi Backman I would also house hack. It is something that can not only bring cash flow but can greatly reduce your expenses and allow you to invest more!
Thanks for the responses. House Hacking does't make sense for me because I currently don't have to pay for a residence. The problem with my market is that I live near Boston and have yet to find a cash flowing property with a reasonable price. I'm looking to use creative financing to finance my first deal. ( seller financing or lease option)
Start attending your local REI meetup https://www.biggerpockets.com/.... You will meet people in your market doing exactly what it is you want to do. Provide value to them and I can guarantee you'll be able to connect with someone who can help you!