Where to find positive cash flow properties???
Lender · Santa Clarita, CA · Member since 2018 · 110 posts · 48 votes
Hey All. Need advice on how, or where to find properties that actually have cash flow. Im in CA, and even though rents are high, they are not comparable to what a mortgage payment with 20% down costs. Now I know digging for deals and finding a really good one will help the numbers, but I still don't see it being a good cash on cash return. Are any of you investing in markets across the country that have attainable returns for your upfront cash?? I believe there are markets out there that produce returns of 5-10%, but im not sure where. Hoping the community can help point me in the right direction.
@Dan Schweit I have family in San Diego and San Francsico and continue to be shocked looking at values. Even tough we had prices go up 7 consecutive years now, you can still buy quality properties in the Midewest, put 20% down and cash flow them well. There is a lot of fool's gold out there, deals that look great on paper, but bleed you slowly over time, so you have to make sure you understand what you are buying. Most of the midwest markets are very competitive and short on inventory, so deals will go very fast, often within a day. I get a lot of calls from out of state investors and most of them end nowhere; I think often the expectations are too high - while it's very possible and we close deals every week, you don't get deals on a silver platter, most of them don't look perfect when you first see them and often you have to "make" them into a deal, which requires work and the willingness to invest your time and energy on top of your capital. A lot depends also on your expectations, how hands on or hands off do you want to be, are you willing to plat this as a long term game or are you looking for quick returns. Sorry if I have more questions that answers, but feel free to reach out!
I was looking at some high end condos in downtown San Diego. Like $800k-2m. I was talking to the agent about what they rent for.
I was amazed at how CHEAP the rent was. At least relative to price. The same fact that makes them crappy to buy as rentals makes them dumb to buy to live in.
If I were looking to live in a downtown $1m+ property I’d RENT! The person renting to me is happy with a negative return. So why not rent, save $, and have flexibility to bail if needed.
@Dan Schweit In Oklahoma City I've seen hundreds of investors grab deals at 60-80k purchase price with 8% rates of return. 1% RTV.. low taxes and OKC is very landlord friendly! I don't know the current ranking but not long ago it was the 10th fastest growing large metro in the US.
@Joel Fine agreed that appreciation is OKC very low. 3% on average, just enough to cover insurance in taxes.. however you're looking at a ton of insulation to recession due to that. The consistent cash flow is what I see so many investors run towards! Especially if an investor is already in those shaky/exciting markets, it's nice to put some money into a boring market for some peace of mind!
I was looking at some high end condos in downtown San Diego. Like $800k-2m. I was talking to the agent about what they rent for.
I was amazed at how CHEAP the rent was. At least relative to price. The same fact that makes them crappy to buy as rentals makes them dumb to buy to live in.
If I were looking to live in a downtown $1m+ property I’d RENT! The person renting to me is happy with a negative return. So why not rent, save $, and have flexibility to bail if needed.
I just think back when I was getting my instrument rating and would ask my instructor how do I tell if there is ice in those clouds or where do I find or avoid ice.. he just would say Ice is were you find it.
so you just have to go looking for it.. ( cash flow with 20% down) much of more rural CA you can easily do this.
its only in the high valued coastal areas that you need more downpayment to cash flow.
What do you consider coastal CA vs rural?? I live about 50 min from the coast and the numbers are still the same. I see you are from Summerlin, I have two rentals in Las Vegas that actually cash flow, albeit very little, but I purchased them in 2009. Are there any instances in that area that you can cash flow with the 20%??
Hey Dan, I live in Vegas and am an investor myself. Yes, you can cashflow with 80% LTV in Vegas still, but the returns will be low. In general if you can find a 3-4% cash on cash with 80% LTV in Vegas with anything B- and above, buy it immediately. If you look at C/D class, you can find 6-8% cash on cash from what I'm seeing.
Hey All. Need advice on how, or where to find properties that actually have cash flow. Im in CA, and even though rents are high, they are not comparable to what a mortgage payment with 20% down costs. Now I know digging for deals and finding a really good one will help the numbers, but I still don't see it being a good cash on cash return. Are any of you investing in markets across the country that have attainable returns for your upfront cash?? I believe there are markets out there that produce returns of 5-10%, but im not sure where. Hoping the community can help point me in the right direction.
OKC is a good market. My SFH are always 12% cash on cash or higher after PITI, capex, maintenance, and PM.
Key is to make a ton of offers and know that you are going to be getting a lot of denials or no responses.
@Doug McVinua
Hey Doug.
Really?! Which district in Phoenix? And is the rental market strong ?
@Kyle Wells
Hi Kyle- what's the zip code for your 4-plex? I couldn't find any multi-units there when I ran my search for Kansis City
@Dan Schweit In Oklahoma City I've seen hundreds of investors grab deals at 60-80k purchase price with 8% rates of return. 1% RTV.. low taxes and OKC is very landlord friendly! I don't know the current ranking but not long ago it was the 10th fastest growing large metro in the US.
Thanks Kiera, this is good info. These are good numbers. I will do some research on the area.
Hey All. Need advice on how, or where to find properties that actually have cash flow. Im in CA, and even though rents are high, they are not comparable to what a mortgage payment with 20% down costs. Now I know digging for deals and finding a really good one will help the numbers, but I still don't see it being a good cash on cash return. Are any of you investing in markets across the country that have attainable returns for your upfront cash?? I believe there are markets out there that produce returns of 5-10%, but im not sure where. Hoping the community can help point me in the right direction.
OKC is a good market. My SFH are always 12% cash on cash or higher after PITI, capex, maintenance, and PM.
Key is to make a ton of offers and know that you are going to be getting a lot of denials or no responses.
Thanks Roshan, Kiera mentioned the area as well and you both have good numbers. I will dig deeper into the area and add it to my list.
I just think back when I was getting my instrument rating and would ask my instructor how do I tell if there is ice in those clouds or where do I find or avoid ice.. he just would say Ice is were you find it.
so you just have to go looking for it.. ( cash flow with 20% down) much of more rural CA you can easily do this.
its only in the high valued coastal areas that you need more downpayment to cash flow.
What do you consider coastal CA vs rural?? I live about 50 min from the coast and the numbers are still the same. I see you are from Summerlin, I have two rentals in Las Vegas that actually cash flow, albeit very little, but I purchased them in 2009. Are there any instances in that area that you can cash flow with the 20%??
Hey Dan, I live in Vegas and am a Realtor and investor myself. Yes, you can cashflow with 80% LTV in Vegas still, but the returns will be low. In general if you can find a 3-4% cash on cash with 80% LTV in Vegas with anything B- and above, buy it immediately. If you look at C/D class, you can find 6-8% cash on cash from what I'm seeing.
Hey Dan, Vegas is growing rapidly for sure. Seems to have cooled quite a bit recently, but im pretty sure thats just across the board market slowdown. I still get calls daily to purchase the properties I do own there. Vegas still interests me as I am close enough to make quick trips to check on things and deal with tenants should I need to. What are you into out there investment wise?
@Dan Schweit
It’s not easy but they are still out there both Los Angeles and San Diego.
Jian, I appreciate the response as well. Im intrigued by your answer and would love to know a bit more. Obviously not looking to tap into all your secrets, but some more valuable insight would be fantastic.
I have friends in LA that were able to get decent cash flow properties from 2-7 units with a larger down payment and being able to lock in with a mid 4% interest rate. I know they work with a lot of brokers and get off market deals. Here in San Diego I think there are still some 2-4 units that cash flow decent. I haven't have much luck with 5+, the ones I found I was always one step behind and they were already in escrow. My plan is to meet with more brokers and see if I can find something decent in the 5+ space.
@Kyle Wells
Hi Kyle- what's the zip code for your 4-plex? I couldn't find any multi-units there when I ran my search for Kansis City
My 4plex is in 66103. Technically in Kansas City, KS, but just a mile or so from Westport area and less than that from KU Med Center. There are quite a few 4plexes in the area.
@Kyle Wells thank you for sharing the info on your properties. It's very helpful. I live in Pasadena, CA and am looking to purchase my first investment property since the crash. I used to own some rentals in socal but couldn't hold onto them through 2009-2010 due to a long eviction process, loss of income etc. I was able to keep a townhome which is in a great location in Pasadena (currently my primary residence). I have roughly $100k to invest and about $125k in equity in the townhome. I'm paying a few $100 a month more to own the townhome as I would to rent in this area but I'd like to hang on to it for future appreciation and invest the $100k in other markets but it's a bit overwhelming researching and deciding on a strategy. Shining object syndrome. (short term rentals, markets with possible future appreciation and lower cash flow vs more cash flow now, SF vs multi, etc..) Do you self manage your 4 plex?
@Kyle Wells thanks for narrowing down the location Kyle. This make it much easier for me to locate. :) Currently there isn't duplexes or 4-plexes that are on the market now. Do you have a good Realtor in the area the you can suggest? Would love to know more and tap into that area.
Thanks in advance!
@Kyle Wells thank you for sharing the info on your properties. It's very helpful. I live in Pasadena, CA and am looking to purchase my first investment property since the crash. I used to own some rentals in socal but couldn't hold onto them through 2009-2010 due to a long eviction process, loss of income etc. I was able to keep a townhome which is in a great location in Pasadena (currently my primary residence). I have roughly $100k to invest and about $125k in equity in the townhome. I'm paying a few $100 a month more to own the townhome as I would to rent in this area but I'd like to hang on to it for future appreciation and invest the $100k in other markets but it's a bit overwhelming researching and deciding on a strategy. Shining object syndrome. (short term rentals, markets with possible future appreciation and lower cash flow vs more cash flow now, SF vs multi, etc..) Do you self manage your 4 plex?
It can definitely be a bit overwhelming investing out of state. I actually relocated from the Seattle area to Kansas City for work for a couple of years (moving back to Seattle in a couple of weeks as my wife and I are expecting our first child in 12 weeks), so it allowed us to view properties in person. There are definitely deals to be had, but they don't last. I do not self manage the 4plex. My realtor actually manages properties as well, but there have been a couple of rough patches as the rehab process on a couple of units took too long given the scope of the project and put him trying to find tenants in dead of winter, which took 1.5-2 months to fill the two units effective March 1. Now things are running much more smoothly.
@Kyle Wells thanks for narrowing down the location Kyle. This make it much easier for me to locate. :) Currently there isn't duplexes or 4-plexes that are on the market now. Do you have a good Realtor in the area the you can suggest? Would love to know more and tap into that area.
Thanks in advance!
There are a couple of duplexes out there right now, but not seeing much as far as 4plexes go. We used Andy Kogan with Remax as our realtor. He actually manages our 4plex as well (I self manage our SFR). Full disclosure, we had a rough patch with Andy at first due to rehab process taking longer than expected as his initial handyman recommendation didn't go well (Andy ended up firing him), but things have been much smoother since as the new handyman gets the job done timely at a fair price.
Congrats on your first child coming soon!
Are you apprehensive at all about holding the out of state rentals when you move? Seems like your timing to relocate and invest turned out to be good!
@Kyle Wells Thanks Kyle! Just read through your other posts too so congratulations on your new baby. How exciting.
I actually found a 4-plex, not in the zip code you provided but very close by in the proximity of KU Med Cntre and Westport area as you've indicated. There are current renters in this property but it's only generating half of what you're making on your 4-plex. I'll reach out to Andy and thanks for the full disclosure.
@Dan Schweit
I would make a list of motivated sellers and run the numbers based on my investment criteria. These properties can be anywhere, as long as they provide positive cash flow. location does not really matter. There are tons of properties which provide good returns and many more which are not worth the time spent. Analysis is the key. Analysis of 100 listed properties are available only a handful of them provide good returns.
Hey All. Need advice on how, or where to find properties that actually have cash flow. Im in CA, and even though rents are high, they are not comparable to what a mortgage payment with 20% down costs. Now I know digging for deals and finding a really good one will help the numbers, but I still don't see it being a good cash on cash return. Are any of you investing in markets across the country that have attainable returns for your upfront cash?? I believe there are markets out there that produce returns of 5-10%, but im not sure where. Hoping the community can help point me in the right direction.
OKC is a good market. My SFH are always 12% cash on cash or higher after PITI, capex, maintenance, and PM.
Key is to make a ton of offers and know that you are going to be getting a lot of denials or no responses.
Thanks Roshan, Kiera mentioned the area as well and you both have good numbers. I will dig deeper into the area and add it to my list.
I'm trying to move into apartments, I could sell you my whole portfolio lol
Hey @Dan Schweit, I have a couple of C-class long term holds here in the NE. I invest in other markets in apartment buildings.
@Kyle Wells Thanks Kyle! Just read through your other posts too so congratulations on your new baby. How exciting.
I actually found a 4-plex, not in the zip code you provided but very close by in the proximity of KU Med Cntre and Westport area as you've indicated. There are current renters in this property but it's only generating half of what you're making on your 4-plex. I'll reach out to Andy and thanks for the full disclosure.
Thanks Cyndi and good luck in your search!
@Dan Schweit my strategy is a bit different from @Roshan K. in that I don't play on market. There are too many pain points. I don't have the time to filter through everything on market, hopefully, beat the other investors, hopefully, make the just low enough offers and then get to inspections and way more work needs to be done than was disclosed and the seller, of course, is only doing as-is. And how are you supposed to do all that out of state!
I'm all about doing everything off market with a team that does everything for you.