The area: Sandusky, OH 44870. The local economy: tied to the seasonal fluctuations of Cedar Point, an amusement park. Most major blue-collar jobs have left leaving a primarily services-based economy around Cedar Point tourists. Background: I grew up there (live in Maryland now) and have seen my childhood neighborhood get taken over by the Firelands Regional Medical Center and have seen the surrounding area properties fall into disrepair. I have a team in place: agent, prop mgmt company, handyman, lawyer, et al. When I buy, I pay cash. I'm fortunate enough to own a couple tech companies that permit me that option. My goal is to find income producing assets for retirement. My two options today are between triple tax-free bond funds from T Rowe Price or incoming producing properties. I have found a number of cash flowing properties that beat the tax-free return from the bond funds. My CPA created a spreadsheet for me that will calculate the return on these properties by taking into account my current tax rate (the highest) and the tax savings from the depreciation on these properties. When comparing the two returns, I want as close to apples vs apples as possible. In light of all that, would anyone invest in cash flowing rentals when the potential appreciation is little to non-existent given the goal is cashflow only?

Yes, but you still have to analyze that deal. It's all about the deal you make, and how much you are actually paying for the property. If you're paying all cash, you won't start making a profit until you recover all of it...in your case, from the cash flow. If you buy a property all cash for $150k, and the cash flow (no loan) is $10k/year, it will take you 15 years (all going perfect) to recover your money spent...and then you start profiting. Until then, all you're doing is getting your own money back in small (very small) pieces. If you put 20% down instead, subtracting the mortgage payments, you could be getting $7k/year in cash flow. That means you would recover all your cash, and start profiting, in year 5. By the time you start profiting the all cash deal 10 years after), you would have profited $35k already...on just the one house. Now the fun begins. Take that same $150k, and put a down payment on 5 houses. You end up cash flowing $35k/yr, instead of only $10k...spending the same money...and, all 5 houses recover their DP in 4 years. So, by the time your all cash deal starts making a profit (11 years worth), you would have already profited around $385k. Can that other investment do that?

I know @Jay Hinrichs is a wise, seasoned investor. His advice is well worth reading 3-4 times and pondering carefully. As for me, I have made a profit for 14 out of 14 years as a cash-flow only investor. The key is ensuring you are generating SUFFICIENT cash flow to cover all the contingencies Jay mentions. I use the 2% Rule, meaning the property must rent for at least 2% of the "all in" costs of purchase, closing, rehab, and holding. My typical rental is a 50-70 year old 2-bed, 1-bath, 700-900 sq foot single family home. I will pay anywhere from $10,000 to $20,000 and put somewhere around $5,000 - $10,000 in for rehab. Add $2,000 or so for closing and holding. My project comes in at a total of $20,000 - $27,000. Then rent that home for $550 - $600. Assume 50% of rents are used up by vacancy, capital expense reserves, day to day maintenance, taxes, legal, management, and insurance. It's a rough and dirty calculation for sure, but I have many years of data on many units to back me up on this being approximately correct. The $600 unit throws off $300/month net operating income. A fully financed house ($25,000) at 5.5% on a 15-year note (@$200/month) leaves you with about $100 per month profit. And that is truly profit because remember we are setting aside funds to deal with vacancy, evictions, busted AC units, roofs, etc. I have a large reserve fund that has been building over the years, enough to where I could basically rebuild several of my houses from the ground up from nothing and still not eat into my monthly cash flow. This reserve fund cushion is critically important to maintaining predictable cash flow. To keep down costs, the cash flow investor must do careful tenant screening. Even though these are lower-end properties, we keep them safe, clean, and functional, and we demand our tenants do the same. This means we must be very careful to whom we rent. There are decent people in the low-income bracket, but of course there are a lot of deadbeats as well. Keep in mind: one deadbeat can cause thousands in damage to a property, eating up years of profits. It is better to sit empty than to rent to a deadbeat in this class of rentals (aka Class C). Collections are a lot harder since they job hop and work for cash. Nothing to garnish. Often no bank account to seize. Credit is often already in the toilet, so there's little incentive to pay you if things go badly. Zero tolerance for late rents. Start eviction immediately when they get behind: no delays, no excuses. One of the best screening tools we now use is the 2-minute in home inspection. Assuming they pass all of our criteria, we go to their current home to sign a holding agreement. If the home stinks, has bugs, or is messy/trashed we simply do not sign the holding agreement and deny the application. This has been a game-changer as a Class C, cash-flow investor and I highly recommend it. This kind of investing won't make you wealthy overnight like the big guys who syndicate 200-door complexes in large cities, but it's also something you can do in your spare time and very low risk to see if you like being a land lord. In the end, it all depends on what you're looking for.

Nope.. I cant understand the thought process of going to all the pain of being a landlord with no hope that the asset will go up in value.. you will WILL lose money with that strategy.. IF IF the assets never go up.. cap ex will eat you alive over time. non payment of rent.. evictions etc etc.. Find better markets that might have a smaller return but have a good chance based on logical demand to increase in value. Or skip houses all together and go right to mid sized B class MF..

@Terry Dunlap Hey Terry, I'm certainly no expert, and others can chime in here, but I think you'll find most REI's invest for cash flow first with appreciation just being icing on the cake since it's never guaranteed. Appreciation certainly builds wealth, but in the midwest, I think you'll find more cash flow and less appreciation. My two cents, and best of luck!

If your question is: Would you invest in real estate just for cashflow? then the answer is absolutely not. It is too much work and you need too many houses. The real money in real estate is in the capital growth. That is what will enable you to retire young, debt free and not managing hundreds of houses! But if your question is: Would you ever buy a cash flowing property in a market that had no growth then yes of course you might, if there was a compelling reason to do so. But you must have both in your portfolio IMHO.

This is the part that I think should be highlighted. I believe it is investing, but as you said it is investing in a small business. Owning rental property that you manage is a business in my opinion. It might not be as intensive as many small businesses, which is what I think makes it attractive (as @Erik Whiting said it can be done in spare time) but it's not truly passive unless you do nothing but own the product. I think this is where a lot of people get in trouble because they think they'll buy a few houses and never think about it again, just collect the checks. This is difficult to do with a product like real estate because it has to be constantly and consistently managed in order to produce a profit; your success or failure in this area will be directly correlated to the effort you put forth in properly managing the asset. I think we (collectively, BP and otherwise) really need to re-frame the conversation about "passive" income. Very little in real estate is truly passive, whatever your interest. I wouldn't necessarily say it's a job in the traditional W-2 sense, but it's also not like when I pull up my Vanguard and see how much I've made (or lost). It's also one of the few investments you can directly influence the value & profitability of through your actions, which in my mind makes it a lot more like a business.

@Jay Hinrichs, I 100% agree with you that this type of investing/small business running is more for someone who wants to get down in the weeds, at first at least. I may not have been clear, but I include management in my list of expenses. So I "pay" myself a 10% management fee as part of the 50% of rent that goes to Operating Expenses. Then my $100/month profit comes on top of that. So one could farm out the management, although I doubt I'd trust a management company. More than likely, I would train a part-time helper to do all the piddly tasks for me and I'd stick with nothing more than signing leases and do the "Broker only" stuff that my state requires a license for to PM someone elses' property. So, yes, the OP will probably not want that, already having to deal with two tech companies. But my ending recommendation was to "try it out" to see if being an REI is something he wants to do or not. I have found in my market at least that one invests for cash flow or appreciation, but usually not both. So since he asked about investing for cash flow only, this is the only way I know to make it work in my market. Maybe there are other ways beyond my experience.

@Terry Dunlap I tried to scan the majority of comments so I'm not replicating too much info. I look at things from a much different lens, so as usual, I don't think I'm in jeopardy of repeating anything. What I'd like to do first is address the misconception that I've seen on this thread that somehow you have to make your money back on a property before you make a profit. This might be one of the most ridiculous things I've ever heard. If you buy a bond, stock, or gold do you not make a profit until your paid enough interest or dividends to recoup your initial investment? As if the asset you purchased is worth nothing. Let's think about this. You have 150k in the bank so your net worth is 150k...if you buy a 150k home is your net worth now 0? or is it still 150k? If this were true, the IRS wouldn't tax your cash flow because "its not profit." Bottom line: Ignore this nonsense. If you buy a cash flowing prop the positive cash flow is profit, just like the interest earned from a savings account is profit. Moving on to your original question: Would you buy for cash flow only? Unequivocally YES. Here's why...My entire investment framework is buying assets "cheap" and selling them when they're "expensive." Sounds obvious but very few "investors" think this way, especially those on BP. It's not to say we don't come to the same conclusions occasionally but the framework in which we analyze a deal is night and day. The difference is most investors only have confidence to buy when assets are already expensive in hopes they'll become more expensive. Do this over the long term, especially now, when we're 40 years into an interest rate bull market, and you'll most likely have problems. Back to the point. US housing, right now, on an inflation adjusted, historical standard is expensive. Super expensive. But debt, is historically cheap. IF, and this is a HUGE IF, you can buy a cash flowing rental property, for under the cost of construction, using 30 year fixed rate debt, you've got tremendous positive asymmetry. In other words, very limited downside and huge upside. But not necessarily with the inflation adjusted appreciation of the asset/property. (And remember housing in the US, appreciated by exactly zero dollars from 1900-2012. I'm happy to provide charts) So where is the probability high that you'll make money? Or what I like to say, increase your purchasing power (accounts for inflation.) Answer: On what you're buying that's cheap, the debt. I know you talked about using cash...I'll address that later. If you can lock in a rate of 4% over 30 years, at any point in the next 30 years, if inflation exceeds 4% theres a transfer of wealth from the issuer of the debt to you. Said more simply, you make money. But wait, there's more! ;) You also make money on inflation itself, even if your asset only goes up with the rate of inflation. NOTICE: 1. You put 20k down on a 100k property 2. Inflation rate is 10% one year 3. Nominal price of your property goes to 110k, an increase of 10% 4. 10k is 50% of the 20K you actually invested So what we can see by this simple example is you gain purchasing power with inflation, as long as you use fixed rate debt. But that's just on the capital appreciation side of the coin, let's look at cash flow. If your mortgage payment is $1000 (fixed) and your rents only go up with inflation. Again, you make money. Take the extreme of the 1970's when inflation increased by 50% in 5 years. Your mortgage is $1000 your rent is $2000, 5 years later your rent is $3000 but your mortgage is still $1000. You gained 100% net cash flow (1000 - 2000 = 1000 and 1000 - 3000 = 2000) but inflation only went up by 50%. Now let's consider the macro. The US is almost 23 trillion in debt, and that's doesn't include off balance sheet debt such as social security and other unfunded liabilities. And currently they're running trillion dollar+ annual deficits...and that's with a republican in the white house. Throw a Dem in the white house in 2020 that drank the MMT (modern monetary theory) coolaid and believes deficits don't matter, and the annual deficit could easily reach 2-3 trillion, or higher. There's 2 ways out of a debt problem. A. Default and B. Inflation This is why, when ever you hear Fed chair Powell talk, it's almost always about inflation targets. Meaning they're actually trying to insure inflation stays above a certain level!! Will we see years of 10% inflation soon, like the 1970's? I don't know? I never deal in certainties, only probabilities. And the probability is, because of these massive macro inflation tailwinds, we'll have more than 4% inflation over the next 30 years. Potentially waaaay more. So your upside is almost limitless, but what's your downside? Again, assuming you buy, a single family home, in a great neighborhood/school district, under the cost of construction, your biggest risk would be deflation. If the CPI, more importantly rents, go down nationally. If this happens, everything I outlined above will work in reverse. Rents go down, housing goes down, and your debt load stays the same. A transfer of wealth from debtor to creditor. But this is where you've hedged your bet's by buying a starter home, preferably in a linear market (one without a lot of downward or upward swings), under the cost of construction. It's pointed out often in the BP forums, there's an under supply of homes under 200k, this is undeniable. So buying this type of home, under construction costs, insures that there will never be more supply of what you have unless prices rise to a level about construction costs. SIDE NOTE: the big mistake investors are making now is they buy over the cost of construction, then you have much more downside. With any strategy there's downside risk. The key is asymmetry. Ok, so that's my answer on why and how I'd invest for cash flow only. Now let's think through using all cash... The key here is the relative price where you buy. There's a saying, "you make money on the buy side." I couldn't agree more. Example: If you could somehow buy a property, with all cash, for 2012 prices, expensive housing market be damned. I know this is probably unrealistic, but again as long as you're buying a starter home under the cost of construction, it's a good way to preserve wealth and create a retirement plan. Which sounds like is your goal. Going back to the inflation scenario, that in my opinion is most probable, real estate historically does very well. Not just in the US but globally. Comparing bonds and a starter home rental property... This is the no brainer of all no brainers. Assume you agree with me that inflation over the next 30 years is the base case. As I discussed earlier, inflation, above the rate of interest, is a transfer of wealth from the creditor to the debtor. In other words, you want to be a debtor. SIDE NOTE: The US is the largest debtor nation in the history of civilization. #inflation And as a bond holder you are the creditor, not the debtor. Making maters worse, my guess is you wouldn't even get an interest rate thats above the Fed's target inflation rate. Meaning there's a 99% chance you lose money. What happens if interest rates go up? Remember, we're 40 years into an interest rate bull market. In other words, interest rates have gone down for 40 years and interest rates are cyclical. As you probably know the value of a bond has an inverse relationship to interest rates. Interest rates go up the value of your bond goes down. So in summary, buying a bond gives you a near 100% chance of losing money because you'll be paid back with dolllars that are worth less...and maybe even worthless...depending on inflation! ;) Then to add insult to injury, the value of the bonds will to down in nominal terms as well, if interest rates go above the 5000 year world wide lows. Don't buy bonds...lol Anyone have any more questions please don't hesitate to find me on social media. Links are in my profile description. George

Would You Buy for Cashflow Only?

Miguel Salaverria

Rental Property Investor · Member since 2019 · 21 posts · 6 votes

7y

@Joe Villeneuve I'm curious about your answer as well! I'm starting off and before I pull the trigger I'd like to have my numbers as tight as possible. I've heard different things as to the viability of financing a property or a portfolio that sits in an LLC. Can you please provide some insight?

0 Reply

Bill Pate

Real Estate Investor · North Ridgeville, OH · Member since 2016 · 97 posts · 81 votes

7y

For me this simply comes down to what are you trying to solve for? Terry in your case because you are not local, and you want to be a passive investor I would recommend you pass on this deal. I would expect you need to net at least 20% cash on cash return for it even to be worth a look. Personally I have bought all 10 of my rentals based strictly on cash flow only. I am in Cleveland and self manage though. My single goal for buying the properties was income, and that's exactly what it has created. Managing the properties myself takes a pretty good amount of free time. Especially at first. Once I have the property in a good spot from a maintenance stand point and have a tenant then it's much less work. For me the time needed is well worth it. To replace the income I receive from my rentals would take about $1-2 million dollars in traditional retirement accounts. We were able to duplicate that income with only a $365k investment. Your money would be better spent on something else. Also you can finance a property owned outright and held in an LLC. I literally just did this and close that loan on Thursday. Used Northwest Bank for the loan. They loaned 70% LTV.

3 Reply

Terry Dunlap

OP

Rental Property Investor · Olney, MD · Member since 2019 · 32 posts · 10 votes

7y

Originally posted by @Matt M.:

@Terry Dunlap

What are these properties cash flowing? And why invest in an area you already know is dead with no foreseeable appreciation. Unless it was cashflowing a lot, my answer would be a big no. I’m spoiled though, I’ve been lucky enough to find stuff that cash flows well, and appreciation is there right away.

Search through this thread as I have a link to my results from the BG Rental Property calculator.

0 Reply

Bill Pate

Real Estate Investor · North Ridgeville, OH · Member since 2016 · 97 posts · 81 votes

7y

I have another question. "My two options today are between triple tax-free bond funds from T Rowe Price or incoming producing properties." Why are these your only options? There are literally hundreds of options from dividend growth stocks, etf's, reits, etc. Personally I am using the income from the rentals to build a dividend growth portfolio. Being 44 years of age I am not ready to retire for at least 9-10 years.

1 Reply

Terry Dunlap

OP

Rental Property Investor · Olney, MD · Member since 2019 · 32 posts · 10 votes

7y

Originally posted by @Bill Pate:

I have another question. "My two options today are between triple tax-free bond funds from T Rowe Price or incoming producing properties." Why are these your only options? There are literally hundreds of options from dividend growth stocks, etf's, reits, etc. Personally I am using the income from the rentals to build a dividend growth portfolio. Being 44 years of age I am not ready to retire for at least 9-10 years.

Just sent you a message.

0 Reply

Angelo Mart

Professional · Parsippany, NJ · Member since 2013 · 384 posts · 262 votes

7y

Invest for cash flow first, tax advantages are second, pay down of loan is third (increase equity = over time) and appreciation is just icing on the cake. As an appraiser and investor I currently do not see much room for appreciation here in my New Jersey. Sorry, but I have a strange feeling that this over inflated bubble will come crashing down since the government is pumping too much hot air into the bubble. With that being said I currently do not anticipate any of my properties increasing anymore in value and if they do it will be a home run. Fortunately I purchased below value a recession prices and values in my area are HIGHER than the 2006 market. However, At the present time the last thing you want to do Is overpay. As long as you are not overpaying and all the numbers make sense in regards to sufficient Cash Flow and management of said property then don't even think about appreciation. If you hold for a long period of time like I plan on doing its completely irrelevant. Appreciation at times is subjective and shaky. Even If all my properties were too drop substantially in value due to market crash. I still have all of the aforementioned benefits because historically rent prices will not decrease AND I am still locked into the loan based upon the current market value which made sense in regards to cash flow. If all people do I bank on appreciation to rip money out of a rental then they put themselves at high risk

2 Reply

Storm S.

Real Estate Agent · Santa Barbara, CA · Member since 2016 · 518 posts · 283 votes

7y

@Terry Dunlap I try to find deals at a 15% IRR and at least a 2x equity multiple over a 5 year hold. I only look in the central coast of California. Most of the money is made from the appreciation and it's not really speculating because I go in to every deal with the assumption that cap rates move against me by 100 basis points.

2 Reply

Jonathan Newsome

Rental Property Investor · Dallas, TX · Member since 2019 · 92 posts · 15 votes

7y

@Joe Villeneuve would you mind if I PM you to gain the bit of knowledge that you shared with @Terry Dunlap ? I too am curious about refi'ing SFR's held by an LLC.

1 Reply

Ryan M.

Developer · Panama City Beach, FL · Member since 2013 · 130 posts · 88 votes

7y

@Terry Dunlap

Why not invest in your tech companies? They should have much higher returns.

I started by working with guys in Akron that were selling dumps to wanna be landlords in the late 90s early 2000s run up. I can tell you that almost every 'investor' that was lured in by cheap cash flowing run down properties went bankrupt within a year or two because your rent and expense projections are always way off. It takes a special hands on operator that knows this biz up and down to succeed. If you gotta pay someone to find and fix and manage, you're already sunk. I wouldn't deal with sub 1k rentals, plus you already noted the decline in your hometown. It's not going to turn around. I feel bad for all the out of town investors overpaying for houses because they fall for 'projected' cash flow on run down City properties.

5 Reply

Adekunle Ilori

Colton, CA · Member since 2019 · 105 posts · 24 votes

7y

I will do it. It depends on the city and the area. If there is population growth and job opportunities in the near future.

0 Reply

Rob Mcclellan

Realtor · Rootstown, OH · Member since 2018 · 98 posts · 39 votes

7y

Yes I would and I do. I buy houses in Akron. $25-$35,000. Rent is $650-900 per month depending on bedrooms, etc. I have houses that i bought in 2004-2005 that are worth less now than what I paid for them but I cash flow every month. I have no intentions to sell, I just collect cash flow. I get 80%-90% financing. Cash flow is my goal with zero capital left in the deal by year 2-3.

4 Reply

Luke CarlPro Member

Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes

7y

Cash Flow The Dough Dough!!!! That’s what it’s all about

Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills

2 Reply

Randall Weatherall

Real Estate Agent · Memphis, TN · Member since 2019 · 261 posts · 253 votes

7y

In my market, Memphis, that's just about all you can invest in; any appreciation is a bonus. We expect to see more of it down the road as the city finally grows into its own more and more as we cement our importance in the warehousing and distribution industries (along with biomedical device industry, interestingly enough) but that shouldn't be an immediate consideration.

As people are pointing out: cashflow seems to take priority early on to amass a larger portfolio to roll into more stable investments eventually.

2 Reply

Michael Ealy

Developer · Cincinnati, OH · Member since 2018 · 1k+ posts · 3k+ votes

7y

Originally posted by @Jay Hinrichs:

@Erik W. its a great model for the buy and hold landlord that does it all themselves.. its just a business your business is low end rentals.. you buying a widget to create a return.

the OP is a tech company owner Multiple and is looking for hands off investing.. this type of investing in my mind is a waste of his time and resources.. by the time he farms it all out he would be very lucky to break even..

not to mention finding debt on low value assets is a chore in its self.. you can find a local bank that will loan to a local like yourself but very tough for out of market folks to duplicate this model..

and for sure you just play the cards that are dealt you in your market.. were we live in Portlandia and in Vegas there are no 10k homes hell there are no 10k lots lots start at 100k .. but we also create wealth with move up in values..

this is constant topic of discussion..

so IMHO if your local and you dig being a landlord for 500 to 600 dollar renters.. then that's great . like I said its a small business just like buying any other small business that is going to generate revenue.. I personally don't call It investing though.

I agree with you Jay.

A smart engineer from my office calculated that someone who makes $200K/yr or makes $100/hour - it's actually costly for that person to buy a single family home that he rents just to make a $200/month cashflow.

One should calculate the time it takes to find the deal, negotiate it, market the rental, screen the tenant, trouble shoot any maintenance or tenant issues that arise, etc.

It's better for a high earning person to invest passively in a syndicated apartment deal and get a 6-8% preferred return and 30% ownership/profit share. That is truly passive and worth the time of a $200K/yr earner.

5 Reply

Bill F.

Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes

7y

@Terry Dunlap

You have different goals than most folks giving you advice so I'd take most everything in this thread with a grain of salt.

Most people on BP are using REI to grow their wealth. You want to use RE to preserve capital and protect against inflation. Nothing wrong with either camp, but what is good for the former doesn't always translate to the latter.

If you buy for cash in an area like Sandusky you will lose capital since supply outstrips demand meaning you won't get any meaningful apperciation. Levering up as others have suggested just means you can buy more properties that will also lose value. Most of these C class rentals will be lucky have CoC in the 5-8% range over along term time horizon after CapEx, turnover costs, PM ect. Don't buy into the old trope that PMs will take care of everything. Instead of managing tenants you'll spend your time managing the PM.

If you want "passive" RE look into syndication or other private offers. It is clear you are good a making money in your day job, so spend your time there and focus on investments that don't have such a high opportunity cost.

3 Reply

Holly Williams

Rental Property Investor · New York City · Member since 2014 · 208 posts · 271 votes

7y

@Terry Dunlap It depends upon how much work you want to do. I would work with your CPA to compare multifamily syndications, small multifamily assets, SFR, other commercial, etc. Then factor in your time and see what pops. Others have given you lots of good advice as well. Feel free to reach out if you think I can help, and keep us posted!

1 Reply

Account Closed

Financial Advisor · CA · Member since 2012 · 128 posts · 76 votes

7y

Yes! I would definitely do that. Put that nice cash in a diversified global fund and catch that 8-15% per annum. Look at the compounding over the years. It's hard to match. Or, rake it in for a couple years and go buy your appreciating asset. Some of each.

1 Reply

Alex KhanPro Member

Specialist · Southeast Michigan · Member since 2015 · 300 posts · 244 votes

7y

@Terry Dunlap There’s still deals out there that will cash flow every month. 40-60k for the purchase and the right property below market value with an instant equity grab. Cashout once rented out and repeat.

The key is in the buying of the right product that will appreciate and the discounted rate you purchase at should be lower than market value if you’re paying cash.

248-979-8119

1 Reply

Matt Lyons

Rental Property Investor · Chicago, IL · Member since 2019 · 109 posts · 443 votes

7y

My opinion is YES...I would. And here is why: 1. You don't know what the future holds and cities do different things, so Cedar Point (or anywhere) can become something different in the next 5 or 10 years, you cant assume it will always be what it is now. 2. You get the tax advantages of owning Real Estate regardless of appreciation and cashflow 3. You would be paying down principle every month so it is like a savings account and it forces you to save money you would otherwise spend

0 Reply

Tracy Johnson-Cantwell

Rental Property Investor · Palm Harbor, FL · Member since 2019 · 5 posts · 3 votes

7y

@Joe Villeneuve *mind blown*

1 Reply

Nicholas Alexander

Rental Property Investor · Charlotte, NC · Member since 2019 · 40 posts · 23 votes

7y

@Terry Dunlap it's a luxury to be able to swing for the fences on appreciation only in every deal. You can't eat future appreciation and live in it.

On the other hand its difficult to generate wealth if all you are doing is trying to leg out bunts to first base on low-margin cash flow.

For me investing is like life the truth is somewhere in between.

3 Reply

Brandon Penn

Rental Property Investor · Erie, PA · Member since 2018 · 84 posts · 462 votes

7y

I do it everyday. I live in Erie, PA so only a couple hours from you (love cedar point by the way). We have little to no appreciation in our market, however it is a great place to buy for cashflow. It all depends on what you want out of your real estate portfolio, but for me I am long term buy and hold. As long as it gets me a healthy cashflow every month I don't care about too much else. It makes me money now, and in 15 years will be paid off making me even more money.

6 Reply

Michael J Callinan

Rental Property Investor · Clinton, CT · Member since 2016 · 49 posts · 36 votes

7y

I agree with some of the members here. I purchase all my properties cash initially then put debt on them after. Having said that I am buying properties that need work and are vacant so I force appreaciation. Even if you put 50% debt on your property to recoup some of your capital to redeploy with a 15 year note let the bank and your tenants work for you. By the end of your note you will be able to still enjoy a debt free property while making more money and having more assists in the end.

2 Reply

Bryan MitchellPro Member

Rental Property Investor · Columbus, GA · Member since 2016 · 623 posts · 337 votes

7y

@Terry Dunlap, Scott Trench would say no. He’s big on appreciation plays. If the market like 2010-13 returns, then yes. I’d still buy no less than 30% below market. So, that’s a conditional yes for me. Great neighborhood during massive market downturn at +30% equity.

1 Reply

Yashen Stewart

Member since 2019 · 1 post · 1 vote

7y

@Joe Villeneuve Thanks for such valuable information. Extremely helpful!

1 Reply

Would You Buy for Cashflow Only?

Would You Buy for Cashflow Only?

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