I try to scour local listings, craiglist, MLS (although I don't expect much there) and every FSBO sign I see. I do not find real estate that has positive cashflow opportunities within even 1.50-2hrs of where I live.
In fact, almost without fail, it seems as though every potential investment I find would rent anually for about 5% of what it's worth. Example, a $200,000 house would rent for around $900/month. Clearly not enough to even break even if you have to finance it. And if you DIDN'T have to finance it, you'd be just as well of to dump $200k into a CD it seems.
What am I missing? I have seen some rehabs with potential, but they have needed MUCH more than I'm capable.
Attorney · Raleigh, NC · Member since 2008 · 4k+ posts · 1k+ votes
18y
Move. You're not going to find trout in a bass pond. For centuries people have physically moved to find the business opportunities in the field they want. Why should REI be any different?
Look to Idaho or Utah. I'm guessing you could find some good cashflow there.
I guess I don't have much of a response to that. I saw your reply last night and thought about it, but... moving is out of the question for me. If that means I can't successfully invest in real estate... bummer. But it seems to me that there are still opportunities and I'm just looking at it wrong. I figured I must be missing something.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
18y
So, if you lived in the CA bay area, and wanted to buy rentals, you'd be totally hosed. Maybe that's true for you, too. If the only thing you can find are $200K houses that rent for $900, then that may be true.
However, have you really looked around everywhere in your area? There may be areas that might work for rentals. Maybe not the nicest part of town, but the areas may be there.
Attorney · Raleigh, NC · Member since 2008 · 4k+ posts · 1k+ votes
18y
Jason,
Run your numbers real quick. Even at 65% (heck even at 50%) of 200k - $900 a month isn't going to cashflow. He's going to need to get stuff at an ARV of 30-40% to cashflow.
Dustin,
This particular strategy isn't going to work in your area. You will need to find another strategy or area. Just because this particular strategy won't work doesn't mean you can't invest at all. But, does it NEED to be REI? It strikes me that in areas that REI doesn't cashflow - properly run businesses sure seem to. Whatever you do, you have the right focus in establishing your base of cashflow to support your REI career. I just had a conversation with an investor in New Zealand yesterday who just bought another 4 million dollars of equity deals worth about 20 million. She can do this because she's built a base of cashflow in.....business (one of which is a boutique children's clothing store). Make your cashflow however you want to dude then take it to where the REI cashflows. Don't quit.