Minimum Rental Cash Flow

3 Replies

What is the minimum amount of cash flow (after expenses) you look for when purchasing a house and how accurate has the 50% rule been for you? Also, what did your very first rental property flow, and would you buy it again? I'm based in the Midwest and curious about C+ properties or higher.
@Braden Downs Hey Braden. I tend to try and follow what Brandon turner teaches, which is $100 per door minimum plus a 12% cash on cash return. $100 is pretty low per door so obviously the more the merrier, but in this hot market, especially where I am, it's pretty hard finding even $100 per door unless you find off market deals. My first purchase was a duplex and it cash flows after aaallll expenses about $300 a month, or $150 per door. Good thing about my location though is the how well the property appreciates.

@Braden Downs - It really depends on the market you're in. Brandon buys $80k houses and cash flows $100 per door. That makes sense. 

If you're purchasing $500k houses, $100 shoudln't cut it. 

Personally, I invest in Denver and I try to make $1,000 over the mortgage. This isn't quite the 50% rule. My mortgages have usually been around $2,000 per month and I am perfectly fine with $3,000 in rent. 

Hope this helps! 

Cashflow per door by itself is a tricky measure.  It is to easily influenced by financing.  If I pay all cash vs all finance.  I like to look at the gross rent multiplier as well.  It is one of the few "real" numbers, tax and insurance are the others.  The rest are calculations and can be manipulated, maintenance, vacancy and so on.   

The exact cash flow is going to hyper local.  Rents have not been keeping pace with appreciation.  This will also effect the cashflow.