Hi folks! Twin cities area resident looking to delve into more real estate deals. Our goal is to work towards income replacement for my wife and I. As a result, we'd like to find properties that will provide us with ~$1000/month in cash flow. I've heard Brandon talk about his properties that cash flow like this on during his podcasts. Are there others (i.e., regular folk) who are cash flowing properties at these levels as well? Any recommendations on the best type of property (i.e., duplex, multifamily, SFH) to reach this goal?
Also interested in meeting with other similar locals on the east metro side of Twin Cities. Seems like all the REI groups are West Side :(
Thanks for reading/responding!
Hi Noel, we work with investors and find that right now the the market is pretty tight from 500k-2 million range. Cap rates range from 10% in areas with shootings to 4% for class “A” buildings.
Because of this we have adapted, we are going where the profits are by finding smaller properties in areas and then targeting these same areas for more purchases. The smaller purchases are more work for us as realtors, but they provide effective cash flow and are easier for our investors to unload if they need some cash. We don’t even bother our clients with properties that are not doing 10% cash on cash return, most are at the 15-20% range.
I say this because it is frustrating when clients are not flexible and only want 5-10 unit properties and are not willing to make money in smaller units despite the fact the market is tight right now in the 5-10 unit range.
$1000/month cash flow is easy to find anywhere - if you are willing to pay cash, if you are planning on financing a deal, then $1000/month would mean a fairly large deal, or a class C-D-F neighborhood. As Amber said, larger deals are very competitive in the Twin Cities right now, so a good return is hard to find, but a high cash flow is easy if you have a lot of money to put down.
You will not be able to find a property likely under 6 units that will cash flow net $1000/month after all expenses and debt service. That happened plenty during 2008-2013, but not today, not even in the worst neighborhoods.
Thanks everyone for taking time to respond :) The market has looked very challenging from a beginer perspective so your comments are appreciated!
I agree with the comments above. I personally have been investing in single family properties the last several years because our strength is on the rehab side and we have been building houses with a cheaper or similar per-unit cost than you can currently find in multi-family. Because house prices have been rising we have been selling to lock in some gains in effort of turning one property into 2. As Amber mentioned you will have a lot more liquidity on a duplex or single family than you will have on a property with more units.
I also agree with the comments that that level of cash flow would be hard to attain in the current market without a decent cash down payment or unless you purchase a property with 4 or more units and 25% down. There are opportunities out there but there are many people looking for them so if you are watching the MLS you should make sure you are ready to buy so you can swoop in if something pops up.
Your other option would be to search for unlisted properties but they can be hard to find.
I have personally cash flowed over $1000 per month on a few properties but they were owned free and clear. May not have been the best use of funds but the cash flow was good for single family houses.
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