Where/how to find highest cash flow?

Question

Where are you finding the highest cash flow for long term rentals? Or how, if you have more of a strategy than a location that brings you higher cash flow.

I have a single family rental in Illinois for the high cash flow and planned on getting more. Due to higher rates etc, the margins are getting tighter than I want. Looking for advice from others across the country! Thanks.

Christian Ehlers · Answer

@Zac Stiles Most rentals in my market don't cashflow very well or at all to just buy as is off the MLS since its a high price and high appreciation market, however finding something to fix up first and then rent out still works in many cases even here on the eastern seacoast. The other option that I've gone with has been Short Term Rentals instead. You can often find a nice blend of appreciation and cashflow in this strategy and there are some property managers that can make the management nearly as passive as LTRentals, if you find the right one.

Also once you furnish the place, most of the management is done besides setting up automated messages to guests/cleaners, answering questions and ordering supplies once in awhile.

Taylor L. · Answer

It's both - strategy and location. Your strategy always matters, and some locations are more difficult to cash flow than others (think expensive high end metro areas).

Are you buying properties which need work and adding value? That's the beginning of the formula - find a property with unrealized potential, buy it at an attractive value, and realize its potential!

Zach Taylor · Answer

@Zac Stiles I agree with @Taylor L. in that location does indeed play a role in cashflow, as some areas are simply higher than others. One thing I do when analyzing a deal and looking to increase cashflow is ask, where can I cut expenses or increase income on the property. Could the rents be higher? Can I vacate the unit, apply some rehab, and increase the rents? Can I submeter or reallocate utility costs to the tenants? Rent by the room if my building is near a metropolis or airport? Is there a garage that I can rent out to an additional tenant for storage? Things like this are what I look for to add to the NOI on an existing property. Also look at other properties which are renting for higher values. What are they doing to achieve those rents, and can you replicate that?

Account Closed · Answer

Can you tell me where I Can find these returns?

Nathan Grabau · Answer

I am underwriting STR's currently. Seeing mid 20s at the lowest CoC and then another 40-50% on the low end for bonus depreciation.

Crisselda Clark · Answer

My last LTR, I bought in Montgomery, AL. Demographically speaking the area has a low purchase price to higher rent ratio. Plus, property taxes are some of the lowest in the country. I chose a well maintained property in a desirable neighborhood, close to the downtown area. Purchased for $130,000, renting at $1,315/mo.

Where/how to find highest cash flow?

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