How you getting SFH cashflow?

Question

Attempting to buy my first out of state SFH in Tennessee.  Been analyzing for a couple weeks with nothing coming close.

How you getting even a little bit of cashflow with house cost so expensive and intrest rates through the roof???

Dan Maciejewski · Answer

Pay cash or put more money into the deal until it cash flows is the easy answer.

Another answer would be to look in another area or to get ahead of rising rents in the path of progress.

There's always money to be made in value-add vs turnkey.  That's my favorite play.

The amazingly low interest rates have spurred the crazy housing (and everywhere) appreciation that we've been seeing.  That has made (a lot of) prices shoot out of most people's buy boxes for cap rates or cash on cash or whatever ROI metric you want to use.Interest rates aren't anywhere near the roof.  They will rise more this year, for sure.  They are coming off of what are sure to be lifetime lows.  A lot of people have decided that the past few years of basically free money are the normal and anything above 3% is usurious!

The real answer is that, while it may be harder to find a deal, there are still deals that work in almost every market.  Whether you are poised to grab them in any particular market is another story.  I tend to see locals, or people that have investments and connections in any particular market having a better chance that the people across the country browsing Redfin or LoopNet on their lunch break.  That is to say that the locals are usually faster to the deal than others.

But the real answer is to keep saving and making yourself better prepared to jump on the deal when you see it.  A few weeks is nothing for analyzing, although it can feel like a long time.  There really isn't a ton of inventory in any market, so you're not looking at a lot of stuff.

Keep running numbers on everything.  99% of it will look like crap.  For each, decide what number would make it look good.  Then make an offer at that number (probably not the best idea if off by 50%) or move on to the next.  Do that a few hundred times and you'll know a good buy as soon as you glance at it!  Then make the offer and lose to the cash buyer with no contingencies and rinse and repeat until the market shifts or you score a great buy.  This applies in every market, BTW.

Also, keep in mind -- the easier it is to buy, the more buyers there are.  The harder it gets, the less buyers.  Adversity can weed out competition.  Like Warrent Buffet says, "Only when the tide goes out do you discover who's been swimming naked."

Bob S. · Answer

I just picked up a 4 br 2 bath 1 car garage in a C   ( everything in Cleveland starts with a B , impossible to make money with an A  ) area of Cleveland , all in 56k, rents will be 1200, taxes about 1400,, about 16% NET cap, 100% hands off. Again its all about knowledge and your team .

Bob S. · Answer

i get 15- 25% NET caps in the Cleveland markets . All in 75K ISH, RENTS 1200 , Duplex all in 80k, rents 1800, Its all about knowledge and your team. Oh and these returns are with all cash purchases, so even higher when and if you refi COC

all the best

How you getting SFH cashflow?

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