How much cash flow are you looking for?

2 Replies

I'm a newer investor. Always open to hearing advice. I personally am only interested in acquiring multi family property's in the $200-$300k range. I need the COC return after debt to be over 16%. I need the property to net atleast 12k annually after debt to keep me in line with my goals. My current strategy is strictly buy and hold. I've found that I sometimes have to search for awhile or wait to find something that fits these parameters. I keep finding deals in my area that just do not cash flow enough to make the investment worth it to me, I'm not just looking to build equity.

For those multi family buy and hold investors out there... what are your requirements??

@Chris Connery I'll let others chime in on specific returns they look for in properties. Every situation will be different. For example, a truly passive investor may be just fine with 8-10% returns, whereas active investors will want at least 15-20%. Most of us will fit somewhere in that spectrum. Beyond cash flows and returns, I would highly recommend you also look for value-add opportunities. You can pour all your money into a nice cash flowing property which hits all your return goals, but if there's no value add opportunity, then your cash is stuck there, trapped in the equity (aka down payment). You'll wait for years to generate enough profit/cash to do another investment. I started down my REI path using that approach and fortunately realized my quandary soon enough to change course. On the other hand, if you buy a property that allows you to add value and force equity through rehabbing or improving operations or both, you can refinance, get some/most/all your initial investment out, and proceed to acquiring more properties. Hope there's a nugget or two in there. Best of luck!

Great stuff chris, I'll take that to heart. Thanks.

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