Cash flow on turnkey property

[David Chi]

Hi

Just wondering if anyone knows the average cash flow one can make on a single family home bought from a turnkey company like rei-invest?

[Mark S.]

@David Chi, it depends on the reserve numbers you use. I would not go off any proforma numbers. With 20% down, 30-year fixed mortgages, after PITI, 10% PM, 8% vacancy, 5% capex, 5% maintenance, mine are between about $100-$250/month with an average closer to $135-$150. Nothing overly spectacular but my reserve numbers might be a little conservative and these are fully rehabbed homes - new roofs, new HVAC, updated plumbing/electrical, etc. I would say my properties are renovated to retail (not just rental) standards. Also, remember that cash flow is only one of several ways real estate pays you. One of my favorite things to do is pile the monthly mortgage statements on my kitchen counter each month and look at the YTD principal paydown column on all my properties. I didn't make those payments, my tenants (effectively) did. Start adding that in along with tax benefits of depreciation, inflation hedging via having a long-term low fixed interest rate mortgage, the potential for appreciation (although I always assume 0% appreciation in my calcs), etc., and real estate investing - even turnkey real estate investing (with the right providers) - becomes quite compelling.