Who's Cash Flowing $850/Month on 1 Property?

11 Replies

Hi!  I know this is a pretty open ended question, but my goal is to reach $100,000/year cash flow through long term buy and hold rental properties over a 10 year time span.  As of now, (I believe my strategy will change once I learn/network/educate myself more) I'd like to buy 1 property per year for the next 10 years.  The goal is to find a property that has the potential to cash flow $10,000/year or ~$850/month.  That's right, net $850/month after full mortgage payment, expenses, property management, cap ex, etc.  If I can find 10 properties like this, I will reach the $100,000/year goal.  I already have two properties like this under my belt (a duplex in a booming area and a 4 family in an up and coming area).

Who is out there doing deals on 1 property that cash flows $850/month, and what kind of deals are they? The two I have were hard to find and I'm not sure the MLS will get any easier finding these deals.

May be possible to do this for 20-50k in cash per door in C/D neighborhoods with a 950-1000/mo rent price

Without mortgages that's not to hard. 

Max, not trying to be mean, but your question is so open ended and vague as to make it almost impossible to respond. Are you suggesting $850/month cash flow with a mortgage at 80% of ARV? (Good luck with that.) Are you suggesting $850/month cash flow with no mortgage whatsoever? Even that can be difficult, in my opinion, as it requires you get gross rents of about $1700/month, which is pretty high for many areas of the country, including yours I would wager. (Note, I'm assuming the 50% rule here, which I think is pretty valid as a rough estimate.) Perhaps if you clarified and provided more detail, others could jump in and answer your question.

I'm not flowing that kind of money per door, but one thing I note is that you have one property that is doing that with 4 doors. That is only $200 per unit, which is really not that great unless the rent is $300 per door. If these are $700+ units that is a fairly tight margin. 

If you get a 4 plex in a really cheap place with high rents.

A 4 plex or a duplex that is two homes on a lot will often cash flow $850+ in the Central Valley. Either 2/1 units in a nice area or 3 bedrooms in a fringe area.

I have two properties that meet this criteria. Also it isnt as hard to find this if you have a long term view, meaning that you are planning on future rent rises combined with future refinances to bring your payment down. I have one property I purchased 5 years ago that at the time, the rent netted me $500 a month over my PITI. Today after 5 years of rent increases couples with refinancing to a lower rate after 5 years of mortgage pay down I get $1100 a month after my PITI. Factorig in my repair costs Im probably right about $850 in free cash flow. That is on a SFH. I have a three unit property that I get about $1500 a month after PITI, and after factoring in repairs Im between $800-$900 a month. Again this is after a few years of rent increases and refinancing.

Time is your greatest ally in the buy and hold real estate game.  

Russell is right - a lot of ways to skin this cat. Time is on your side if you purchase with long term view. Just rented a SFH for 2 year @ $2000 / mo. Have a $80k HELOC on the SFH( probably appraise for $230k to $250k now.) used the $80k HELOC to buy outright a 4-2.5 SFH in another state ( college town) rents for $1400+. Together they exceed your criteria but there was a ton of sweat equity getting there....

Originally posted by @Russell Brazil :

I have two properties that meet this criteria. Also it isnt as hard to find this if you have a long term view, meaning that you are planning on future rent rises combined with future refinances to bring your payment down. I have one property I purchased 5 years ago that at the time, the rent netted me $500 a month over my PITI. Today after 5 years of rent increases couples with refinancing to a lower rate after 5 years of mortgage pay down I get $1100 a month after my PITI. Factorig in my repair costs Im probably right about $850 in free cash flow. That is on a SFH. I have a three unit property that I get about $1500 a month after PITI, and after factoring in repairs Im between $800-$900 a month. Again this is after a few years of rent increases and refinancing.

Time is your greatest ally in the buy and hold real estate game.  

Thanks for the response Russell, I agree, if you keep in mind the rent raises and refinances, this becomes even more appealing.  

I need to put together a legitimate business plan which I think will help me stay on track.  I just came across a good article on BP for this, https://www.biggerpockets.com/real-estate-investin...

Originally posted by @John Chapman :

Max, not trying to be mean, but your question is so open ended and vague as to make it almost impossible to respond. Are you suggesting $850/month cash flow with a mortgage at 80% of ARV? (Good luck with that.) Are you suggesting $850/month cash flow with no mortgage whatsoever? Even that can be difficult, in my opinion, as it requires you get gross rents of about $1700/month, which is pretty high for many areas of the country, including yours I would wager. (Note, I'm assuming the 50% rule here, which I think is pretty valid as a rough estimate.) Perhaps if you clarified and provided more detail, others could jump in and answer your question.

Hey John, thanks for the response. The experience I have is as owner occupied, one 85% LTV and one at 96.5% LTV (with FHA owner occupied). The cash on cash returns as owner occupied is also extremely nice.

@John Chapman @JD Martin

Here are the #'s I have for the first property:

Here are the inputs for Property #1:

Purchase Price: $171,000

Interest Rate: 5.125%

Down Payment: 15%

Total Amount Brought to Closing (down payment and closing costs): $22,875

Gross Rental Income When Bought: $1,050

Gross Rental Income 1 Year Later: $2,450

Monthly Water Bill I Pay: $83

Property Management Fee: Assuming 10%, but I manage this property for now, so for now it is 0%. Need to include the 10% for long term growth.

Monthly Taxes: $338

Monthly Insurance: $90

To - Date CMA Price: $210,000

What I'm calculating for my results are as follows:

Cash flow per year excluding property management: $10,541

Cash on cash return: 27%

Cap rate: 10%

2% rule: 1.43%

Cash flow per year including a future property manager: $7,601

Cash flow per year looking only at PITI: $14,762

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