What do I need to do to generate 1k in cashflow with 60k?

50 Replies

How much does, say, a 100k rental property generate in cashflow every month?

What is the best way to generate a 1k in cashflow in rental properties using 60k in cash?

Thank you so much

There really isn't a set formula on what returns you will get with a $100k property - it really depends on the local area.

To maximized the number of properties that you can buy, purchase a multi-unit to "house hack" at say 150k with 3.5% down fha financing, and then look for a commercial loan to spend the other 55k waiting for a deal where you can get the owner to carry part of the down payment. If it's a 200k property you'd need 50k down but the owner could finance 25K of that 50k over 5 years. If the DSCR is good then commercial lenders will allow it. That would allow you to generate income from 550k in property for 60k.

This is a very easy math problem.  You want 1k / month, or 12k/year, on 60k invested.  This is a 20% cash-on-cash return.  Can you find properties that return you 20% cash-on-cash reliably?

1k cash flow on a 60k property?  My advise is to buy in California in 1966.  ;)

In all seriousness I suspect the most feasible way To get that kind of cash on cash return is to use leverage to your advantage by househacking as stated by Jill above.  Might take some work to find deals that good though.

you have to value add and flip. very rare that a rental will do this well in todays market unless you know how to run and manage D class effectivly

I think first off you need to state what your goals are.  $1K from $60K isn't specific enough to let us know what your skills, temperament, and interests are.  Do you want "mail box money" that all you have to do is open up an envelop with a check from your brokerage account, or do you want bust your butt working in a business 60 hours a week?
If you want to do it via buy-and-hold real estate, it will be a totally different strategy than a series of fix-n-flips, and there are no guarantees with either strategy.

If it were me, I would buy three Class C houses in my market for $20K or less "all in" each that rent for $600/month or more. I figure 40% for all expenses and about 10% for vacancy and CapEx. So take income less expenses, vacancy, and CapEx leaves $300 per house * 3 houses = $900 / month cash in my pocket...about as close as I could realistically get to your $1,000. It can be done, but it takes a lot of work to find those kinds of "screaming" deals, you have to know what you're doing or you'll get stuck with a major money pit, and your market has to support these numbers.

I have done this. Please friend me so we can talk.

Everything has a risk/reward ratio.  If I was looking for a 20% return consistently, I would not be looking at rentals.  Unless you are a master at midwest C or D class self-managing,  this is too far to reach. 

Note holders have probably purchased NPNs and got this, but they are pros. I can get well over a 20% equity capture on a BRRR, but I need much more than $60k and it's not cashflow per se.

I'd rather save $1k-$5k per month doing high value tasks myself between naps than shoot for the moon on the risk meter.  Analyze what is costing you money to outsource and learn to do it- like your own taxes or buying and selling on your own. High dollars for effort expended.  

Like Erik mentions, we know nothing of your skillset or experience.  What are you good at and what do you like to do?

Just buy a fourplex in the Midwest or even a triplex

With cash ..I’ve done it on much less than 60k .

Originally posted by @Nathan Asher Robson :

How much does, say, a 100k rental property generate in cashflow every month?

What is the best way to generate a 1k in cashflow in rental properties using 60k in cash?

Thank you so much

Either buy low and add value

Detroit market, I am currently doing this

Originally posted by @Nathan Asher Robson :

How much does, say, a 100k rental property generate in cashflow every month?

What is the best way to generate a 1k in cashflow in rental properties using 60k in cash?

Thank you so much

 Take a look at the spreadsheet IXOYE

Average Cash Flow Per Door In Phoenix Metro Area

https://www.biggerpockets.com/forums/600/topics/584916-average-cash-flow-per-door-in-phoenix-metro-area

Honestly, you either need to build up to it or save more money. As the cost of debt service is increasing and rent ratios are getting worse, 20% is pretty unrealistic in a stable and predictable neighborhood. You can certainly slumlord it, but that tends to not work over the long haul and it's hard to build a portfolio around homes that never have any true value.

My recommendation would be to purchase 2 homes at under $100k that will rent at $1,000/mo or more. I see a few of these each month on the MLS in Indianapolis and occasionally on the wholesale market as well. You will have a $20k-$25k investment with a yield around 8%... which is considerably less than what you are wanting.

Each year, your properties will appreciate around $2,500-$3,500 in equity and cash flow about $1,800 each. After 2 years, you should have enough equity build and saved cash flow to purchase a third home in a similar method. At that point, you can likely start adding a home to your portfolio each year with the equity growth and cash flow. Once you get to about 6 or 7 homes... you will have met your numbers (about 5 years) and will be able to start picking up 2 homes every year and begin to start building more rapidly. By 10 years, you should have between 15-20 homes, all cash flowing about $120/mo and building about $50k-$60k in equity every year with a $2M portfolio... of course, the bank will own most of it, but you will probably have about $350k-$500k in equity at that point.

This is my favorite strategy that I have clients using as it's eliminates and manages a lot of liabilities that comes with owning rental properties.

  1. Newer houses most likely mean less maintenance expense
  2. Insurance costs is usually less
  3. Less chance of vandalism, theft, bad tenants, legal problems, etc
  4. Township/Suburban family homes tend in neighborhoods with decent schools tend to retain tenants (average of 5+ years) about 3 X as long as urban or city rentals (average of 1-2 years.) Tenant turnover is the most expensive part of the investment cycle and most disruptive to your performance
  5. There will always be demand in areas where families want to raise their children so the appreciation will be relatively stable and the rents will be able to increase almost every year
  6. Banks like to loan on these properties as they are considered much lower risk

I know that it doesn't meet your current goals, but it happens faster than you think. I have several client purchasing 1-2 homes each year by refinancing the equity from their portfolio to use as a downpayment for the next. You'll meet your goals in 5 years and be in a place to replace your income in 12-15 years. If you can save money to expedite this process by paying down the principal on the debt service or adding to the cash available for acquisition, you can move even faster.

Something to consider. If I am building a portfolio, would I rather build it around a foundation of a desirable home in a desirable neighborhood... or a cash cow that never grows in equity and is constantly robbing my cash flow with the problems that come along with those types of properties?

Build it right. Find a good property to build around. Measure risks and liabilities with each location, housing type, and tenant demographic. For instance, I just met an investor who purchased a home that he planned on BRRRR'ing because it was such a "good deal." Now he can't as he found that he's in a flood zone and has to carry mandatory flood insurance for the bank to refinance and the flood insurance kills the cash flow (about $1,800/year.) If something looks like a great deal, you're likely missing a piece of the story. Find proven methods with predictable risks and liabilities. The one above is my favorite for most of my US clients, but there are several ideas.

Another direction that you might consider is section 8 housing. I don't mess with it, so I don't know much about it, but some people do very well. If it's something you're interested in, you might check with @Harvey Levin who is one of the section 8 guru's in Indianapolis. He's one of the larger and most experienced section 8 PM in Indianapolis.

If you use your 60k as a down payment to leverage 300k+ of real estate, you could have several properties that in total bring $1000 / month cash flow.  It's going to be challenging, and you're likely going to have to look at hundreds of houses to find the right deal, but it's not impossible.  You'll also likely need to manage these properties yourself to hit your cash flow target.  

My first couple deals were owner financed properties where I only put down $5,000 or $10,000 dollars. Since they were owner financed, I didn't have PMI expense. So it's definitely possible to spread out your 60k as down payments for multiple properties and achieve your goals but a lot has to go right.

@Nathan Asher Robson buy 2 Section 8 properties, rent them for $1,200-$1,400 each.. leverage and repeat! 🤙🏻

@Timothy M. Thank you so much for simplifying it. I see that I still have a lot of learning and a lot of reading to do. Thank you again for your time and advice!

@Jay absolutely not. But hopefully with some more time, I’ll start getting the hang of things

Originally posted by @Nathan Asher Robson :

@Dennis M. I’d love to know how you did that

 Simply buy a triplex or quad in the Midwest and manage it yourself 

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