Does this exist- 150k single family renting for $1100 per month?

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Does this exist- 150k single family renting for $1100 per month?

Bruce Faulk
New York City, NY · Member since 2015 · 46 posts · 15 votes

Hello BP,

Thank you for the great information and sharing here. As a newbie, I really appreciate the advice. 

I have been looking to buy here in New York City where I live and am hitting the wall. I think a better use of my capital to get started in real estate is to keep renting (we have a great deal in an apt we love) and buy an investment property. Here’s my math; please let me know if I am calculating right and if the deal I am envisioning exists anywhere in the continental US. Thanks very much. 

I have 30k cash

I can build it to maybe 50k in the next 6 months. 
I have 800+ credit

I am thinking to buy a 150k B class property, putting the 50K down

That makes a mortgage of 100k

At today’s rate of 6.28% that is mortgage of $850

Taxes, insurance & 8% property management per month is roughly $1100

Is there a market where this investment would break even, much less cash flow and with good property management?

Thank you!

1Reply
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Most Popular Reply

Joseph Crunkilton
Rental Property Investor · Oregon City, OR · Member since 2020 · 324 posts · 780 votes
3y

@Bruce Faulk Absolutely. Check out @Zach Lemaster and some of the deals his team are putting together. They work in markets where the 1% rule applies and can help you get a deal put together. 

9Reply
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  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    3y

    $30k isn't truly enough for a $150k house.

    $150k house with B areas are available, but you're limited to cities with declining populations. 

    6.28% is solid, doubt you get that.

    0Reply
  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    3y

    You need factor in vacancy 5% and cap/ex $150 a month or so average for a typical sf. To cashflow a $150k should get you atleast $1500 rent and on a multi $30k down could get you $1800 or so rent on a $150k place.

    1Reply
  • Bruce Faulk
    OP
    New York City, NY · Member since 2015 · 46 posts · 15 votes
    3y

    Thanks very much Henry.  What market would you suggest I look for this multi family?

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @Bruce Faulk:

    It's basic math. Can a $1 million property produce enough income to pay for itself? In some markets, yes. In other markets, no. You have to crunch the numbers and determine what works for a given market.

    Here's a guide that describes what good cash flow looks like and how to analyze a property.

    https://www.biggerpockets.com/...

    I recommend you follow Dave Meyer on Biggerpockets. He regularly crunches the numbers and shows which markets are strong for investors. Here's an example: 

    The DIY Landlord Book4.7247 Reviews
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    5Reply
  • Bruce Faulk
    OP
    New York City, NY · Member since 2015 · 46 posts · 15 votes
    3y

    Thanks very much Nathan. Will watch and follow. Hope you are well, please let me know if I can help you in any way. I am head of recruiting for a tech company. 

    Bruce

    0Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    3y

    @Bruce Faulk due to the dramatic increase in real estate prices the last several years, it's extremely difficult to cashflow with a 20-25% down mortgage on a rental property that's Class A, or even Class B.

    Class C seems to be even challenging in the high cost states like NY and CA.

    The biggest challenge is understanding that 99% of the properties listed on the MLS are not deals at their listed prices. So, you'll need to invest time making HUNDREDS of low-ball offers to get one accepted or find a way to source properties BEFORE they are listed by an agent.

    So, you either have to accept it and speculate that future increases in rents & values will make it worthwhile, or invest out of state.

    You might want to follow the "Deep Dive" series we're doing on our BiggerPockets blog about Metro Detroit cities, City of Detroit Neighborhoods and comparing Metro Detroit to other hotspots investors usually consider:

    https://www.biggerpockets.com/...
    (BP search feature can be problematic, so we’ve also added links @ our website under View Cities & Neighborhoods We Service)

    Please send us any feedback via email, as we do not use the DM feature here.
    Also, if you like our response, please don’t be shy about giving us a vote😊

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  • Bruce Faulk
    OP
    New York City, NY · Member since 2015 · 46 posts · 15 votes
    3y

    Thanks very much Drew- great advice I will follow. And will up vote 😀 Please let me know if I can help you or your network in any way. 

    Bruce

    0Reply
  • Joe HammelBusiness Member
    Real Estate Agent · Metro Detroit, MI · Member since 2018 · 614 posts · 666 votes
    3y

    @Bruce Faulk

    Purchase: $80k-$130k

    Rent: $1200-$1500

    ROI: 10-14%

    Cash flow: $250-$350/door

    Appreciation: Double digit (for the past 10 years, can send data)

    Location: C+, B- (suburbs and certain markets)

    We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, and mortgage industry National footprints. Ever hear of Ford, Rocket mortgage, or Beaumont hospitals? All complimented with Amazon fulfillment centers, google, and more tech manufacturing jobs.

    The bad reputation comes from OOS investors wanting $20k D market properties. We don’t buy those lol.

    [email protected]248-422-1685
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    4Reply
  • Joe HammelBusiness Member
    Real Estate Agent · Metro Detroit, MI · Member since 2018 · 614 posts · 666 votes
    3y

    @Joe Hammel

    Sorry this is in Metro Detroit ^

    [email protected]248-422-1685
    FIRE Realty Team - Keller Williams5380 Reviews
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    0Reply
  • Bruce Faulk
    OP
    New York City, NY · Member since 2015 · 46 posts · 15 votes
    3y

    Thanks for sending Joe. Are these turnkey properties you have?  Would like to look at prospectus or whatever you have. 

    Bruce

    0Reply
  • Billy Daniel
    Rental Property Investor · Russellville, AR · Member since 2014 · 688 posts · 509 votes
    3y

    Hey @Bruce Faulk!  To find those deals you would likely need to move away from the larger markets into areas you've never heard of.  I'm talking towns of 20k-50k people.  The challenge with those areas will be the lack of competition in some areas.  For instance, my town has a population of around 30k.  Sometimes it's a fight to get on a contractor's schedule.  There are also only a handful of PMs (that I would even talk to).

    To answer your question, yes those properties exist.  I know because I own a $142k house that rents for $1100.

    0Reply
  • Bruce Faulk
    OP
    New York City, NY · Member since 2015 · 46 posts · 15 votes
    3y

    Thanks Daniel!

    0Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    You will find this in Killeen Texas. 

    1Reply
  • Joseph Crunkilton
    Rental Property Investor · Oregon City, OR · Member since 2020 · 324 posts · 780 votes
    3y

    @Bruce Faulk Absolutely. Check out @Zach Lemaster and some of the deals his team are putting together. They work in markets where the 1% rule applies and can help you get a deal put together. 

    9Reply
  • Andrew Jennings Freerks
    Developer · NY · Member since 2021 · 131 posts · 106 votes
    3y

    @Bruce Faulk  Upstate NY you can get this.  In B area's of Albany, NY you can get a 2 family house for $150K in decent shape.  As for your numbers, you could probably self manage, saving yourself some money.  Just find yourself a good handyman to call on when things break.  Happy to jump on a call to discuss further.

    2Reply
  • Bruce Faulk
    OP
    New York City, NY · Member since 2015 · 46 posts · 15 votes
    3y

    Thanks Andrew!  Look forward to connecting and talking about Albany. 

    Bruce

    0Reply
  • Jared Trindade
    Real Estate Agent · Fayetteville, NC · Member since 2022 · 214 posts · 293 votes
    3y
    Quote from @Bruce Faulk:

    Hello BP,

    Thank you for the great information and sharing here. As a newbie, I really appreciate the advice. 

    I have been looking to buy here in New York City where I live and am hitting the wall. I think a better use of my capital to get started in real estate is to keep renting (we have a great deal in an apt we love) and buy an investment property. Here’s my math; please let me know if I am calculating right and if the deal I am envisioning exists anywhere in the continental US. Thanks very much. 

    I have 30k cash

    I can build it to maybe 50k in the next 6 months. 
    I have 800+ credit

    I am thinking to buy a 150k B class property, putting the 50K down

    That makes a mortgage of 100k

    At today’s rate of 6.28% that is mortgage of $850

    Taxes, insurance & 8% property management per month is roughly $1100

    Is there a market where this investment would break even, much less cash flow and with good property management?

    Thank you!

    Take a look at NC, you can find deals that will fall into that category, and offer you things in the numbers you are looking for. Check out Fayetteville NC, a growing market, with massive military influx and a need for rentals. Rental rates increased about $100 a year for the past 4 years, and it's not impossible to find something that will rent for $1300+ in town around that $150,000 mark. It's also entirely possible for you to look at different ways to fund your deals that can change the route of how you get your ROI.

    I do copious amounts of market data research on the area. https://www.biggerpockets.com/... This is a Fayetteville post I did, lots of information that is easy to digest. If you find yourself interested in learning more about NC and it markets, I would love to connect with you. I encourage you to read my post on Fayetteville, and would love feedback if you do so. 

    Hope the information from everyone here has been fruitful, would love for you to keep us posted on your journey. 

    Cheers!

    1Reply
  • Nate Monson
    Real Estate Agent · Albany, NY · Member since 2017 · 309 posts · 149 votes
    3y

    @Bruce Faulk You may already know the answer to this question, but going to take this in a slightly different direction since there are plenty other great posts about the numbers. What made you interested in single family rentals? If it was to get in the door or that you're looking for a place to park money with as little headache as possible than forget this post even exists lol. However, if you are interested in cash flow or a good deal, I would consider looking at multifamily properties as well. You will be able to scale a lot faster this way. Just some food for thought :)

    2Reply
  • Alex Chang
    Member since 2022 · 3 posts · 3 votes
    3y

    Do you ever consider Airbnb? Here's a deal I helped my mom buy (I did the loan lol) in Kansas City.

    $130k purchase price (turnkey)

    Market rent is probably $1000-1100

    Mortgage is $850

    Would cashflow or at least breakeven as a long term rental. Principal paydown and eventual appreciation would still make it a good play. Kansas City is a growing market (not sure why poster above thinks only declining markets get these numbers). 

    But here's where things started getting fun.

    Spent 4k on furnishings. 

    First month listed on Airbnb = 3k!

    Second and third months (summer) = 4k

    Between 2-3k the next couple months.

    Then we got a 3 month booking for $3k a month (getting us through slow season and much higher net profit with only 1 cleaning fee). 

    Tiny 2 bedroom 1 bath house. Cute screened in front porch though which is why I told my mom to jump on it. Figured worst case it makes $1500 a month on Airbnb and we still breakeven. Don't forget utilities, cleaning and PM. 

    But this turned into a straight up cash flow monster. Will have to run the numbers for 2022 but I think she probably cleared 20k last year, on a 30k down payment plus 4k in furnishings. 50% cash on cash return. 

    Tenants on the other house she bought in the area a few blocks away just moved out after 4 years. Bought for 75k in 2017 and just spent 30k on rehab. Was renting for $900 a month, could rent for similar $1000-1100. Now turning it into an Airbnb as well. Even in what is starting to be an oversaturated STR market, I think there is still decent demand for these small, affordable houses. $80-120 a night, high occupancy, lots of long bookings. We'll see how it goes but even 2k a month would be a huge win.

    Also keep in mind on these cheap rentals, one water heater, HVAC, or major expense can pretty much wipe out your cash flow. Most your gains will come from appreciation. Airbnb, even if you breakeven, is still preferable to long term rentals in my opinion because the property is at least maintained over the years. We needed to do some major rehab to the other rental because they had a crack in the bathtub and never told us, which caused water damage to the subfloor including the kitchen that was on the other side of the wall. Good thing ARV is now probably close to 150k.

    1Reply
  • Tim Bee
    Investor · CA · Member since 2023 · 196 posts · 107 votes
    3y

    150K and it rents for $1100.  That's not a good deal.  Skip it and keep looking.  You have to at least meet the 1% rule. 

    0Reply
  • Bruce Faulk
    OP
    New York City, NY · Member since 2015 · 46 posts · 15 votes
    3y

    Thanks very much Nate- yes, it looks like Multi family might be the way to go.

    Bruce

    0Reply
  • Dustin Street
    Real Estate Agent · Kansas City, MO · Member since 2022 · 147 posts · 40 votes
    3y
    Quote from @Bruce Faulk:

    Hello BP,

    Thank you for the great information and sharing here. As a newbie, I really appreciate the advice. 

    I have been looking to buy here in New York City where I live and am hitting the wall. I think a better use of my capital to get started in real estate is to keep renting (we have a great deal in an apt we love) and buy an investment property. Here’s my math; please let me know if I am calculating right and if the deal I am envisioning exists anywhere in the continental US. Thanks very much. 

    I have 30k cash

    I can build it to maybe 50k in the next 6 months. 
    I have 800+ credit

    I am thinking to buy a 150k B class property, putting the 50K down

    That makes a mortgage of 100k

    At today’s rate of 6.28% that is mortgage of $850

    Taxes, insurance & 8% property management per month is roughly $1100

    Is there a market where this investment would break even, much less cash flow and with good property management?

    Thank you!


     You can easily do this in Kansas City! I regularly have properties available that not only cashflow, but also are looking at pretty good long term appreciation. Plus I have some solid property management contacts out here. Let me know if you're interested in learning about how our city is growing, and why it's a perfect market for buying and holding!

    0Reply
  • Chris Mignone
    Investor · Huntsville, AL · Member since 2015 · 149 posts · 80 votes
    3y
    Quote from @Bruce Faulk:

    Hello BP,

    Thank you for the great information and sharing here. As a newbie, I really appreciate the advice. 

    I have been looking to buy here in New York City where I live and am hitting the wall. I think a better use of my capital to get started in real estate is to keep renting (we have a great deal in an apt we love) and buy an investment property. Here’s my math; please let me know if I am calculating right and if the deal I am envisioning exists anywhere in the continental US. Thanks very much. 

    I have 30k cash

    I can build it to maybe 50k in the next 6 months. 
    I have 800+ credit

    I am thinking to buy a 150k B class property, putting the 50K down

    That makes a mortgage of 100k

    At today’s rate of 6.28% that is mortgage of $850

    Taxes, insurance & 8% property management per month is roughly $1100

    Is there a market where this investment would break even, much less cash flow and with good property management?

    Thank you!


     Hey Bruce,

    I'm in NY as well, on Long Island, and invest in and around Huntsville, Alabama. I literally get deals like this coming across my desk every day. I can definitely help you if you're interested. Let me know if you want to connect and discuss. Happy to help.

    1Reply
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