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!
@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.
My issue is that I can't seem to find any off market deals that are actually deals. Know of any good wholesalers?
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!
Thanks Jennifer! I would be lying if I said I'm not a little nervous about being 1,800 miles from my investment properties. Fortunately, I have quite a few strong connections in the Kansad City area and will likely visit once a year for work (and will make it a priority to drive by/visit the properties).
@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.
My issue is that I can't seem to find any off market deals that are actually deals. Know of any good wholesalers?
No! I stick to brokers. I've connected with you so we can stay connected about OKC! I'm curious how on market properties are going for you though! What rates of return have you been able to snag?
@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.
My issue is that I can't seem to find any off market deals that are actually deals. Know of any good wholesalers?
No! I stick to brokers. I've connected with you so we can stay connected about OKC! I'm curious how on market properties are going for you though! What rates of return have you been able to snag?
12% cash on cash or more after expenses. Expenses include PITI, vacancy (5%), repairs (7.5%-10%), capex (7.5%-10%), and PM (10%)
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.
Maybe check studio condo in Long Beach. I think you might have a chance to break even with 20%ish but IDK for sure. Good luck!
@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!
Totally agree! That's why I've been investing in Cleveland. Sounds like I should look at OKC when I'm ready to add another metro to my portfolio. (Actually 3% appreciation sounds excellent. I underwrite my deals assuming no appreciation. Thanks to the power of leverage, 3% appreciation would add about 10% to my cash on cash returns!)
@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!
Totally agree! That's why I've been investing in Cleveland. Sounds like I should look at OKC when I'm ready to add another metro to my portfolio. (Actually 3% appreciation sounds excellent. I underwrite my deals assuming no appreciation. Thanks to the power of leverage, 3% appreciation would add about 10% to my cash on cash returns!)
I've connected with you so we can stay in touch about OKC! I'm happy to be a resource!