What's a "good Cash flow" range?
New to Real Estate · Indianapolis, IN · Member since 2022 · 36 posts · 28 votes
What's a "good Cash flow" range?
Most Popular Reply
Realtor · Columbus Ohio, Cleveland Ohio · Member since 2022 · 849 posts · 830 votes
3yIn a high appreciation market like Columbus id like to see $100/mo. Somewhere like Cleveland thats a high cashflow market, closer to $300-400/mo
28 Replies
- Rental Property Investor · St. Louis, MO · Member since 2022 · 125 posts · 124 votes3y
Anything not netting a negative cashflow is profitable, but only you can determine how much profit is worth your time and investment. I personally set a minimum of $300/month cashflow for me to consider purchasing a property.
Same factors will help you determine whether to do a flip or LTR. Flip will take you probably 6 months of hell and you have a huge learning curve being your first REI, which is high risk for minimal (if any) profit. Rentals can be renovated in a few weeks and if renting doesn't work out you can likely sell it quickly in this housing market with lack of inventory.
Best of luck! - Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes3y
It really depends on where you are in your investing career. People used to want $100/mo cashflow. Well you can get that guaranteed with no expenses by putting $30k in the bank. So it seems dumb to put more than that in to real estate where the dream is no vacancy no repair no capex to get the same results. (And that’s before 10% selling costs.).
You have to buy in an appreciating market or under market value or where rents are increasing so returns will increase. Cashflow will represent about 10% of your real estate return, at least until they are paid off.
- Realtor · Columbus Ohio, Cleveland Ohio · Member since 2022 · 849 posts · 830 votes3y
In a high appreciation market like Columbus id like to see $100/mo. Somewhere like Cleveland thats a high cashflow market, closer to $300-400/mo
- Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes3y
You cannot look at monthly cashflow opportunity. Aiming for "$100 per door" or "$300 per door" is completely arbitrary and meaningless.
Instead, focus on the return on your investment. So the question should be "If I deploy $50,000 into residential long term rental real estate, what return should I expect to see on that investment?"
The answer will vary a lot depending on the sub-market, property condition, and class. But as a very rough target, most would agree that a 10% return on that money would be strong (meaning that investing $50k would get you $5k in cash flow per year, or $417 per month)
- 3yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
That's not up to us, it's up to you. You're the only one that can answer that question. What works for anyone else reading this, has no bearing at all on what's right for you.
You have to start with a plan with very specific financial goals, and have the plan, at each step along the way, tell you what that number needs to be.
- Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes3y
@Sparkle Carlock, what are your long-term investment goals? To be upfront, flipping homes is a full-time business, especially with current market conditions. In my opinion, the barrier to entry for flips is higher than acquiring long-term rentals. Moreover, if you do decide that you would like to pursue flips, do not try to tackle the first one on your own, I highly advise that you team up with someone who has prior experience. As others have pointed out, solely focusing on cash flow alone is not the end-all-be-all. You could buy an absolute dump of a property in a D-class market that cash flows $400 per month but you're assuming a mass amount of risk doing so. Furthermore, if you buy the property in all cash then surely the deal will cash flow, but what does this say about your return on investment? Probably not great. Hope this makes sense!
- 3yHenry ClarkPro MemberDeveloper · Member since 2020 · 4k+ posts · 4k+ votes
Since you are just starting go with a flip. Pick something easy. Paint, new roof, landscaping, new flooring, bathroom remodel, kitchen remodel. Don't due any structural wall items, ADU, foundation, etc.
Do the flip. Break even or make a little money. Get started. Would not lock into a long term investment up front. Understand your downside risk.
. - Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes3y
I wouldn't want less than $100 a month cashflow. Make sure you understand what "cashflow" actually means.
Here's a guide that describes what good cash flow looks like and how to analyze a property.
https://www.biggerpockets.com/...
The DIY Landlord Book4.7248 Reviews - Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes3y
Quote from @Sparkle Carlock:
Hi BP.!
I am trying to narrow down the strategy I'd like to used to get started. As I look at properties around me, I am stuck between (1) entering REI with a flip to gain more investing captial and (2) acquiring a property for LTR. My question is: when trying to understand what type of property deal/numbers would benefit/profit, what is considered a profitable monthly cashflow opportunity?
I appreciated any advice from you! Just trying to gain as much understanding as possible before investing personal finances!
There is no right or wrong answer, its all-personal Me (always cash buys ) all my rentals are 20% ish or better, Flips at least 40% but Im spoiled :)
Good luck
- Realtor · Lafayette, IN · Member since 2020 · 44 posts · 23 votes3y
Quote from @Account Closed:
Anything not netting a negative cashflow is profitable, but only you can determine how much profit is worth your time and investment. I personally set a minimum of $300/month cashflow for me to consider purchasing a property.
Same factors will help you determine whether to do a flip or LTR. Flip will take you probably 6 months of hell and you have a huge learning curve being your first REI, which is high risk for minimal (if any) profit. Rentals can be renovated in a few weeks and if renting doesn't work out you can likely sell it quickly in this housing market with lack of inventory.
Best of luck!Thanks for your reply Dominick. By this are you meaning $300/mo per unit?
- 3yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
I think this is a great question. It's gotten tougher to cashflow in the last few years as prices stayed elevated while interest rates went up.
I want to comment on the first part of your post, though. You said you were considering "entering with a flip to gain capital" - and unfortunately this is going to be really, really difficult. The best flippers flip as a business, and it actually takes money to flip - you'll need 10-15% down even for hard money, and then cash for debt service, closing costs, holding costs, etc. Trying to start with a flip and losing money would be a big setback, and even breaking even would be a huge waste of your time.
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Sparkle Carlock:
Hi BP.!
I am trying to narrow down the strategy I'd like to used to get started. As I look at properties around me, I am stuck between (1) entering REI with a flip to gain more investing captial and (2) acquiring a property for LTR. My question is: when trying to understand what type of property deal/numbers would benefit/profit, what is considered a profitable monthly cashflow opportunity?
I appreciated any advice from you! Just trying to gain as much understanding as possible before investing personal finances!
In your Indiana market, DSCR >= 1.40
- New to Real Estate · Texas Christian University · Member since 2022 · 118 posts · 56 votes3y
Spark, you should defiantly aim for a 1.5% - 2% rent of the purchase price for an investment. This a great tool to determine your return on the investment. Also, be aware of the location and market that you are investing in. Make sure that the property has the ability to appreciate over the years. You make money when you buy so buy at a good price that guarantees built in equity. Focus on multifamily deals that will allow you to rent more units. I love the idea of volume. There is a reason big syndication focuses on volume...
- 3yJohn O'LearyPro MemberLender · Winter Park, FL · Member since 2021 · 737 posts · 412 votes
I typically look for at least a 15% cash on cash return.
- New to Real Estate · Indianapolis, IN · Member since 2022 · 36 posts · 28 votes3y
I majorly do appreciate everyone's comments and advice. I have a feeling that maybe flipping is not the way to enter since I lack cash on hand. But I'm willing to enter via other ways, rentals included - thus asking about the cash flow monthly rates to expect.
Again, THANK YOU ALL SO MUCH!
- Rental Property Investor · St. Louis, MO · Member since 2022 · 125 posts · 124 votes3y
Quote from @Ryan Ness:
Quote from @Account Closed:
Anything not netting a negative cashflow is profitable, but only you can determine how much profit is worth your time and investment. I personally set a minimum of $300/month cashflow for me to consider purchasing a property.
Same factors will help you determine whether to do a flip or LTR. Flip will take you probably 6 months of hell and you have a huge learning curve being your first REI, which is high risk for minimal (if any) profit. Rentals can be renovated in a few weeks and if renting doesn't work out you can likely sell it quickly in this housing market with lack of inventory.
Best of luck!Thanks for your reply Dominick. By this are you meaning $300/mo per unit?
Correct. People who say cashflow doesn't matter and focus on CoCR on your investments aren't trying to retire early through REI. They are focusing on REI being their source of income in retirement. I want to have time freedom now, not when I only have 15 years of quality life left. The way to do that is by replacing your income now with passive income, aka cashflow.
- 3yDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
Quote from @Account Closed:
Quote from @Ryan Ness:
Quote from @Account Closed:
Anything not netting a negative cashflow is profitable, but only you can determine how much profit is worth your time and investment. I personally set a minimum of $300/month cashflow for me to consider purchasing a property.
Same factors will help you determine whether to do a flip or LTR. Flip will take you probably 6 months of hell and you have a huge learning curve being your first REI, which is high risk for minimal (if any) profit. Rentals can be renovated in a few weeks and if renting doesn't work out you can likely sell it quickly in this housing market with lack of inventory.
Best of luck!Thanks for your reply Dominick. By this are you meaning $300/mo per unit?
Correct. People who say cashflow doesn't matter and focus on CoCR on your investments aren't trying to retire early through REI. They are focusing on REI being their source of income in retirement. I want to have time freedom now, not when I only have 15 years of quality life left. The way to do that is by replacing your income now with passive income, aka cashflow.
Your answer is very market specific and may be correct in you market if you are excluding sweat equity. But there are markets that have monthly returns more than the entire rent and cash flow provides a small percentage of the return.
My lowest return RE has exceeded $2.5k month. My best is over $8k/month. In 12 months $96k ($8k *12).RE has some facets that are National but there are some facets that are local. Be careful attributing attributes of one market to all markets.
- Rental Property Investor · St. Louis, MO · Member since 2022 · 125 posts · 124 votes3y
Quote from @Dan H.:
Quote from @Account Closed:
Quote from @Ryan Ness:
Quote from @Account Closed:
Anything not netting a negative cashflow is profitable, but only you can determine how much profit is worth your time and investment. I personally set a minimum of $300/month cashflow for me to consider purchasing a property.
Same factors will help you determine whether to do a flip or LTR. Flip will take you probably 6 months of hell and you have a huge learning curve being your first REI, which is high risk for minimal (if any) profit. Rentals can be renovated in a few weeks and if renting doesn't work out you can likely sell it quickly in this housing market with lack of inventory.
Best of luck!Thanks for your reply Dominick. By this are you meaning $300/mo per unit?
Correct. People who say cashflow doesn't matter and focus on CoCR on your investments aren't trying to retire early through REI. They are focusing on REI being their source of income in retirement. I want to have time freedom now, not when I only have 15 years of quality life left. The way to do that is by replacing your income now with passive income, aka cashflow.
Your answer is very market specific and may be correct in you market if you are excluding sweat equity. But there are markets that have monthly returns more than the entire rent and cash flow provides a small percentage of the return.
My lowest return RE has exceeded $2.5k month. My best is over $8k/month. In 12 months $96k ($8k *12).RE has some facets that are National but there are some facets that are local. Be careful attributing attributes of one market to all markets.
Hey Dan, that’s an accurate statement. However, I wouldn’t consider different markets for residential to be different faucets. No matter where the location is, what good is a high return if the equity is so small that it barely cash flows? That’s capitol and a lot of time tied up before the property even becomes profitable enough to be worth it
- 3yDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
Quote from @Account Closed:
Quote from @Dan H.:
Quote from @Account Closed:
Quote from @Ryan Ness:
Quote from @Account Closed:
Anything not netting a negative cashflow is profitable, but only you can determine how much profit is worth your time and investment. I personally set a minimum of $300/month cashflow for me to consider purchasing a property.
Same factors will help you determine whether to do a flip or LTR. Flip will take you probably 6 months of hell and you have a huge learning curve being your first REI, which is high risk for minimal (if any) profit. Rentals can be renovated in a few weeks and if renting doesn't work out you can likely sell it quickly in this housing market with lack of inventory.
Best of luck!Thanks for your reply Dominick. By this are you meaning $300/mo per unit?
Correct. People who say cashflow doesn't matter and focus on CoCR on your investments aren't trying to retire early through REI. They are focusing on REI being their source of income in retirement. I want to have time freedom now, not when I only have 15 years of quality life left. The way to do that is by replacing your income now with passive income, aka cashflow.
Your answer is very market specific and may be correct in you market if you are excluding sweat equity. But there are markets that have monthly returns more than the entire rent and cash flow provides a small percentage of the return.
My lowest return RE has exceeded $2.5k month. My best is over $8k/month. In 12 months $96k ($8k *12).RE has some facets that are National but there are some facets that are local. Be careful attributing attributes of one market to all markets.
Hey Dan, that’s an accurate statement. However, I wouldn’t consider different markets for residential to be different faucets. No matter where the location is, what good is a high return if the equity is so small that it barely cash flows? That’s capitol and a lot of time tied up before the property even becomes profitable enough to be worth it
The statements “People who say cashflow doesn't matter and focus on CoCR on your investments aren't trying to retire early through REI. They are focusing on REI being their source of income in retirement. ” is what I was referring to as market specific as I have a property that has produced an average of over $100k/year return with little cash flow. over $100k/year for a single property can help retire early. There are markets that cash flow produces virtually all the return and markets that cash flow provides minimal percent of the return.
- Investor · Richmond, VA · Member since 2023 · 459 posts · 474 votes3y
I look for minimum of $300/ month cash flow for LTR on a house in the $250-300k range.
- 3yDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votesI hope you are also expecting appreciation in excess of inflation because at 80% LTV this is 6% return which is crap long term return for an investment as non passive as residential RE. S&P 500 has lifetime return near 10%. Money market options currently approach that return. RE syndications that have exited recently are typically far higher than double the cash flow return (but leery about using past returns as indicator of future return). Each of these are far more passive than residential RE.
Quote from @Glen Wiley:
I look for minimum of $300/ month cash flow for LTR on a house in the $250-300k range.
6% return from cash flow would be good in many markets, but 6% in many other markets (Detroit, cleveland, etc) would be horrendous.
minimum cash flow expectation is market specific. In my market I currently see nothing on MLS or off market that cash flows as a traditional LTR (not including rent by room or STR/MTR). Result kid I have not purchased a new acquisition in 15 months (it’s Ok because I purchased over $4m that month).
Good luck - Rental Property Investor · Lubbock, TX · Member since 2021 · 58 posts · 21 votes3y
Any property that has more monthly revenue than expenses is considered profitable. The amount of cashflow you desire is up to you and it varies per market. A good start is to aim for a minimum of $100/month in cash flow for a LTR after accounting for all expenses.
- Investor · Richmond, VA · Member since 2023 · 459 posts · 474 votes3y
Quote from @Dan H.:
I hope you are also expecting appreciation in excess of inflation because at 80% LTV this is 6% return which is crap long term return for an investment as non passive as residential RE. S&P 500 has lifetime return near 10%. Money market options currently approach that return. RE syndications that have exited recently are typically far higher than double the cash flow return (but leery about using past returns as indicator of future return). Each of these are far more passive than residential RE.Quote from @Glen Wiley:
I look for minimum of $300/ month cash flow for LTR on a house in the $250-300k range.
6% return from cash flow would be good in many markets, but 6% in many other markets (Detroit, cleveland, etc) would be horrendous.
minimum cash flow expectation is market specific. In my market I currently see nothing on MLS or off market that cash flows as a traditional LTR (not including rent by room or STR/MTR). Result kid I have not purchased a new acquisition in 15 months (it’s Ok because I purchased over $4m that month).
Good luckYou are missing some the vectors that must be included in roi:
1. Cash flow based on rent which increases year over year
2. Appreciation- depending on area is often well over 5% per year
3. Principal pay down, grows every month over life of loan
4. Depreciation over 27 years, even better if bonus appreciation.
Add these together and roi easily exceeds 30% yoy, add in ability to cash out refi every year and roi moves past 3 digits. S&P is for chumps.
- 3yAlecia LovelessPro MemberMember since 2019 · 3k+ posts · 2k+ votes
@Sparkle Carlock It depends a lot on your market. In my particular area $2-300 per door is considered good cash flow and is how most sellers price their properties. However the appreciation in my market in the past 3 years is insane. I know you don’t buy for appreciation and I assumed it would be around 3% when I bought but it’s been closer to 500% and currently the market is still hot. I think the appreciation rates have settled as our prices have risen but I analyze tons of deals and still occasionally find a piece of hanging fruit. Mostly those deals are for higher cash flow but occasionally I’m finding mismanagement or other things that make for good opportunities just like you can find in any market.
Obviously if you’re in Austin or LA your cash flow will be higher because your cost of entry is higher.
- 3yJohn MorganPro MemberRental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
I’m good with $300-$500/month if nothing breaks in an area that has potential. Market rent will come up quite a bit in a few years so plant that tree and enjoy the ride. Then save up for a 20% down payment on the next one.
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