I was able to get three cash flow positive properties with solid CoC returns during the downturn, and part of the way up, but in the greater Seattle area it is getting harder and harder. Prices are too high relative to rents. Now that the market has recovered, it's damn near impossible to find workable deals in SFH. So I started looking at Turnkey companies, I looked at Clearwater/Tampa/Jacksonville Florida area and it seems that the 50-75K properties with good cash flow in those areas are in the ghetto. So given that I'm not interested in paying 20% over market value for a shoddily remodeled turnkey property, where they make money off me again for property management, and buying in the Tampa area and setting up my own team is looking like a crap shoot, where do I buy and set up my own team? Ohio? Indiana? Nevada? Or just buy a multi family in NC paid in full, and let the PM live there for free, doing all the maintenance as well?

@Curt Davis I like blunt so I'll respectfully disagree with you. People that likely have never lived in a low income area (the hood) always assume that it will be a bad experience to invest there. There are hard working honest people in these areas that stay because it is what they can afford and because they are among people they have known all their lives, they are loyal tenants that remain in properties for years and work hard to move from renter to home owner in a $30K or $40K house. They are grateful for an investor that will fix up and sell them a lease option opportunity because they cannot qualify for a traditional bank loan right away. The same practice of screening your tenants applies in low income areas. Before joining the military I grow up in Inglewood and Compton CA, the majority of the people in those neighbors take care of each other, we only hear about the 6 O'Clock news version of these areas. If there are a 100 people in the neighbor peacefully living there lives we hear about the one asshole the in the news and he/she becomes the spokesperson for the entire area, same applies for the investor who had a bad tenant. Investors that have trouble in these areas either do not take the time to understand the market or the people that live there. People in the hood know when someone really cares about/respects them enough to provide quality housing and who is just "collecting rent from those people" (and this is not about race, this applies in any low income area). Majority of my immediate family has lived in 46218 Bright Wood area in Indy for decades, my 80 year old aunt has been in her house for 50+ years. Just like any other area you have to know/learn your market and respect/screen your tenants. Target the 100 not the one.

@Clay Sellers Forgot to add that I have two single families right next door to each other in 46219. Got one at end of 2016 ($35k, now worth $60k) and one in 2017 ($50k, estimate $45k) no montage on either so cash flow still works. Next are duplex and hopefully a 4-plex this year. I got sidetracked/comfortable with day job...but back on track now.

@Javier Gaillard you have to use the @Jim Holmes in order for him to see your message. When you use @ look at the bottom of post box and select name of BP member you want to reply to. Happy investing.

Finishing up another wholesale deal on another duplex, $57,500, the buyer will be doing $40k in rehab to convert to SFR, ARV $160k. Someone Could also do $25-30k in rehab and rent top for $650, bottom for $850, $1500 per month on an all in purchase of $87,500 + cc. $1.72%, Has a garage for each unit too, you could even rent those for an extra $25-50 each. Separately metered, tenants to pay utilities, city taxes cover trash removal. Not the greatest deal in town but not horrible cash flow, right?

@Dale Rast Appreciate that...it took me two years of reading and coming here before I just did it. Good luck.

@Clay Sellers Hi Clay, I have actually had good success with tenants. I learned very quickly that it is all about screening, screening, and screening . All but one tenant...it was my first time screening myself, I fell for the sob story were I did not follow my qualification rules. It ended in eviction. I subscribed to the same property manager software (Bulidum) that my first/only PM used. Software has been well worth fees. Look for working class areas, usually the "hood" is 5-10 blocks in a huge city, the rest are just trying to make a decent life. I just screened/approved my first Section 8 tenant. Including the housing assistance she met my credit, criminal and eviction criteria. She has worked same job for years but just does not make a true living wage. Getting the credit, criminal and eviction history, contacting the previous landlord, getting the employment verification (even when I have to pay for it) has gotten me great tenant results. I just increased my application fee to cover majority of these fees. I was well under what others were charging $20, changed to $35 after 2 years, still lower than a lot. My screening is $15, verifications are about $25 I just get income because it also provides employment verification without paying for both. I am transitioning from single family to 2-4 units with goal to get into 10-20 unit. I like the consolidation of effort multi-family provides. Hope to close on a duplex next month. Like all things if it doesn't feel right, don't do it. I live by that and it has worked so far since first tenant. My qualifications are on my site under documents www.newliferei.com. Good luck in CA...I lived in LA (Compton & Long Beach) from age 9-18 and I am semi-normal.

Good markets for inexpensive properties with good cash flow?

Account Closed

Redwood City, CA · Member since 2014 · 83 posts · 19 votes

10y

Here's an article that was published in HousingWire on Nov. 10th on the top 10 investment markets based on yield.

http://www.housingwire.com/articles/35574

Hope that's helpful.

-S

1 Reply

Alex CraigBusiness Member

Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes

10y

I think the 50 to 75k home for the most part (not always), will be in those types of low income areas that is best owned by local investors. There is no doubt money can be made in that space, but for an out of state investors, it is a tad more risky and the PM has to be specialized in this field and ready for the day to day adventures that comes in this space.

Maybe it would be best to look at "A" class deals that tend to be more passive and set up self management.

Good markets for inexpensive properties with good cash flow?

Most Popular Reply

45 Replies