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Lenny Reinstein
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What is the cheapest STR or LTR I can buy that will give me positive cash flow?

Lenny Reinstein
Posted Mar 11 2023, 15:15

Even though I am almost 50 and work in finance in NY, I have zero practical experience with the real estate investment. Dreamed about real estate investing fore years... 

I would like to buy my 1st property and try it out. I cannot be in FL to manage, so will need to hire a management company.

And don't want to start with a large loan. Want to start small. Where could I buy a studio or 1br that is a ready to rent condition that would make sense with the current interest rates and market situation,  and what would be the price range? Would love your advise. 

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Austen Mueller
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Austen Mueller
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Replied Mar 11 2023, 15:33

Congradualtions on deciding to jump into real estate. 

 Do you REALLY want to buy the "cheapest" rental that will cashflow. I think your asking for a bad first exprience. I agree you should start small but too small is a seperate issue.  One bedroom studio is going to be a condo. Condo doesnt nessessarly=cheap. Usually they are located in more expensive downtown areas. In my market of PA, I just helpded a buyer purchase a 2bed/2bath condo unit for $255k. An hour down the road the same buyer could have bought 2 seperate properties they own fee simple. 

Lots of markets you can buy cashflowing property for $100k or under. But again. That isnt alweays the easierst property to own. Even with property managment. Rougher tenant base typiclly and more delayed maintinaceand & vacancy, whitch will deplete your cashflow and increase advil intake. I would target B class property for ease of ownership.  

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Lenny Reinstein
Replied Mar 11 2023, 15:39
Quote from @Austen Mueller:

Congradualtions on deciding to jump into real estate. 

 Do you REALLY want to buy the "cheapest" rental that will cashflow. I think your asking for a bad first exprience. I agree you should start small but too small is a seperate issue.  One bedroom studio is going to be a condo. Condo doesnt nessessarly=cheap. Usually they are located in more expensive downtown areas. In my market of PA, I just helpded a buyer purchase a 2bed/2bath condo unit for $255k. An hour down the road the same buyer could have bought 2 seperate properties they own fee simple. 

Lots of markets you can buy cashflowing property for $100k or under. But again. That isnt alweays the easierst property to own. Even with property managment. Rougher tenant base typiclly and more delayed maintinaceand & vacancy, whitch will deplete your cashflow and increase advil intake. I would target B class property for ease of ownership.  

If the "cheapest great deal" is 250K, so be it. My focus on getting an STR place that will have 85% occupancy or higher. So I am thinking Florida - Orlando area or Tampa area or Greater Miami, but open to suggestions. Assuming I am not greedy and OK with only 2-3-5% profit the first few years, what would you recommend? 
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Austen Mueller
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Austen Mueller
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Replied Mar 11 2023, 16:01

I focus more on LTR. I cant compare my market to Orlando. STR is a little trickier due to certain laws and ristrictions. Whitch I am unfamiliar with in Orlando.

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Tyler Gibson
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Tyler Gibson
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Replied Mar 11 2023, 16:41
Quote from @Lenny Reinstein:

Even though I am almost 50 and work in finance in NY, I have zero practical experience with the real estate investment. Dreamed about real estate investing fore years... 

I would like to buy my 1st property and try it out. I cannot be in FL to manage, so will need to hire a management company.

And don't want to start with a large loan. Want to start small. Where could I buy a studio or 1br that is a ready to rent condition that would make sense with the current interest rates and market situation,  and what would be the price range? Would love your advise. 


 What's your budget look like? The cheapest property you can buy is not always the one that's going to be the best investment. It's important to look at other factors not just cash flow will there be appreciation? (This is how you really grow your wealth)

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Lenny Reinstein
Replied Mar 11 2023, 16:49
Quote from @Tyler Gibson:
Quote from @Lenny Reinstein:

Even though I am almost 50 and work in finance in NY, I have zero practical experience with the real estate investment. Dreamed about real estate investing fore years... 

I would like to buy my 1st property and try it out. I cannot be in FL to manage, so will need to hire a management company.

And don't want to start with a large loan. Want to start small. Where could I buy a studio or 1br that is a ready to rent condition that would make sense with the current interest rates and market situation,  and what would be the price range? Would love your advise. 


 What's your budget look like? The cheapest property you can buy is not always the one that's going to be the best investment. It's important to look at other factors not just cash flow will there be appreciation? (This is how you really grow your wealth)

The budget is that I can easily come up with 60-80K in cash. And can borrow up to 200K. But would rather start at a lower price point. 
I.e., a studio in a popular spot that is easy to rent out would be something I'd be looking for.

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Tyler Gibson
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Tyler Gibson
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Replied Mar 11 2023, 16:56
Quote from @Lenny Reinstein:
Quote from @Tyler Gibson:
Quote from @Lenny Reinstein:

Even though I am almost 50 and work in finance in NY, I have zero practical experience with the real estate investment. Dreamed about real estate investing fore years... 

I would like to buy my 1st property and try it out. I cannot be in FL to manage, so will need to hire a management company.

And don't want to start with a large loan. Want to start small. Where could I buy a studio or 1br that is a ready to rent condition that would make sense with the current interest rates and market situation,  and what would be the price range? Would love your advise. 


 What's your budget look like? The cheapest property you can buy is not always the one that's going to be the best investment. It's important to look at other factors not just cash flow will there be appreciation? (This is how you really grow your wealth)

The budget is that I can easily come up with 60-80K in cash. And can borrow up to 200K. But would rather start at a lower price point. 
I.e., a studio in a popular spot that is easy to rent out would be something I'd be looking for.

 If you have $80,000 in cash you could probably borrow more than 200,000. However, if you're traditional financing pre-approval is for $200,000 it's because of your personal debt to income ratio. If you were to use something like a debt service coverage ratio loan you can afford up to 320,000. If you'd like to find a small condo for long-term rentals in the Orlando area I can certainly help you find something under 200,000. If you want to find a short-term rental I suggest you find something a little bit bigger at the top end of your budget based off of the amount of cash you have. Smaller units don't perform very well in the Disney area because you have to compete directly with hotels on price.

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Lewis Anderson
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Lewis Anderson
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Replied Mar 11 2023, 17:02
Quote from @Lenny Reinstein:
Quote from @Austen Mueller:

Congradualtions on deciding to jump into real estate. 

 Do you REALLY want to buy the "cheapest" rental that will cashflow. I think your asking for a bad first exprience. I agree you should start small but too small is a seperate issue.  One bedroom studio is going to be a condo. Condo doesnt nessessarly=cheap. Usually they are located in more expensive downtown areas. In my market of PA, I just helpded a buyer purchase a 2bed/2bath condo unit for $255k. An hour down the road the same buyer could have bought 2 seperate properties they own fee simple. 

Lots of markets you can buy cashflowing property for $100k or under. But again. That isnt alweays the easierst property to own. Even with property managment. Rougher tenant base typiclly and more delayed maintinaceand & vacancy, whitch will deplete your cashflow and increase advil intake. I would target B class property for ease of ownership.  

If the "cheapest great deal" is 250K, so be it. My focus on getting an STR place that will have 85% occupancy or higher. So I am thinking Florida - Orlando area or Tampa area or Greater Miami, but open to suggestions. Assuming I am not greedy and OK with only 2-3-5% profit the first few years, what would you recommend? 
Miami is very restrictive on STR. Tampa you can find some great properties that can get you good revenue but 250K is low. If you want to stay in the Tampa area than you can go further south to the Riverview or Apollo Beach Market where things are cheaper those places are great for LTR. Orlando you are more likely to find a good property closer to that price, but your options are limited. If you need an agent in the area to show you around look me up.

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Replied Mar 11 2023, 18:16
Quote from @Lewis Anderson:
Quote from @Lenny Reinstein:
Quote from @Austen Mueller:

Congradualtions on deciding to jump into real estate. 

 Do you REALLY want to buy the "cheapest" rental that will cashflow. I think your asking for a bad first exprience. I agree you should start small but too small is a seperate issue.  One bedroom studio is going to be a condo. Condo doesnt nessessarly=cheap. Usually they are located in more expensive downtown areas. In my market of PA, I just helpded a buyer purchase a 2bed/2bath condo unit for $255k. An hour down the road the same buyer could have bought 2 seperate properties they own fee simple. 

Lots of markets you can buy cashflowing property for $100k or under. But again. That isnt alweays the easierst property to own. Even with property managment. Rougher tenant base typiclly and more delayed maintinaceand & vacancy, whitch will deplete your cashflow and increase advil intake. I would target B class property for ease of ownership.  

If the "cheapest great deal" is 250K, so be it. My focus on getting an STR place that will have 85% occupancy or higher. So I am thinking Florida - Orlando area or Tampa area or Greater Miami, but open to suggestions. Assuming I am not greedy and OK with only 2-3-5% profit the first few years, what would you recommend? 
Miami is very restrictive on STR. Tampa you can find some great properties that can get you good revenue but 250K is low. If you want to stay in the Tampa area than you can go further south to the Riverview or Apollo Beach Market where things are cheaper those places are great for LTR. Orlando you are more likely to find a good property closer to that price, but your options are limited. If you need an agent in the area to show you around look me up.

@Lenny Reinstein My fiancé and I live in the Tampa area and are new to investing too so figured I'd share what we've learned so far and you can do what you see fit with the information. When we did our market research, we noticed for STR's, 3 or more bedroom properties performed significantly better than 1-2 properties. This was likely because you could comfortably fit 10 (or sometimes more if you had a 4/3 or 5/3), and it was also advantageous to have a pool, so we took a step back, saved up more and started going after those properties. Most HOA's won't let you do STR, so we had to find properties not in those areas you can find some of these properties in the Seminole or largo area near Clearwater, but they are a little more costly. As some other posters suggested, we went a little out of the city to Brandon which is still only 20 minutes from tampa and slightly closer to Orlando. We found a nice 4bed/2bath that we got for 369.8k with max seller credits (7.3k). Anything we saw on our searches under 330k was either cash/hard money only or needed significant work. Our plan is to get this first property up and running then once we learn the process buy our next property in the largo/Seminole area.

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Tim J.
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Tim J.
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Replied Mar 11 2023, 18:32
I am not familiar with FL, but please check on the insurance rates as they have gone up significantly from what I heard across FL and LA.  
I suspect the OP is wanting to "go cheap"/start small in order to test the waters so to speak.  Not a bad thought.

Another option is to do a JV or partner with someone else who is more experienced.  That give you some reduction of risk and a mentor.

At the end of the day, do your diligence, find your team, and pull the trigger.  You will learn some lessons, and hopefully continue with buying more.

Not sure I would start with STR - but that's just my (non)preference.  

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Bjorn Ahlblad
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Bjorn Ahlblad
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Replied Mar 11 2023, 18:45

Up top on the left you will see a tab, Education, start there, look at some podcasts. Don't buy anything until you know what you are doing. Be patient.

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Eliott Elias#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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Eliott Elias#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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Replied Mar 11 2023, 20:15

Why are you looking for the cheapest property? If money is your objection snap out of it, the deal holds more value. You can structure any good deal with no money out of your pocket. 

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Replied Mar 11 2023, 21:53


Quote from @Austen Mueller:

Congradualtions on deciding to jump into real estate. 

 Do you REALLY want to buy the "cheapest" rental that will cashflow. I think your asking for a bad first exprience. I agree you should start small but too small is a seperate issue.  One bedroom studio is going to be a condo. Condo doesnt nessessarly=cheap. Usually they are located in more expensive downtown areas. In my market of PA, I just helpded a buyer purchase a 2bed/2bath condo unit for $255k. An hour down the road the same buyer could have bought 2 seperate properties they own fee simple. 

Lots of markets you can buy cashflowing property for $100k or under. But again. That isnt alweays the easierst property to own. Even with property managment. Rougher tenant base typiclly and more delayed maintinaceand & vacancy, whitch will deplete your cashflow and increase advil intake. I would target B class property for ease of ownership.  


 Please can you elaborate what are B class property ? New to investing thanks

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Dan Heuschele
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Dan Heuschele
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Replied Mar 11 2023, 23:59

I suspect the answer to your question as initially proposed is some property in a cheap, lower class area or Detroit or Cleveland.  As other posts have noted, this would be a mistake to go this approach.  These properties are best left for experts with lots of experience in these lower class areas and who have scale so that a bad tenant that heavily damages a unit is buffered by many other units that have positive cash flow.

At your age and RE experience level, you need to educate before jumping in.  But RE has many options and paths.  Which one is correct for you?  I do not know you beyond what you have posted, but my recommendation is to start with a book on syndications and determine if that is the best route for you (based on what little I know about you I think this could be your best route in RE).

You likely know this ...   Current money market and CDs are at ~5%.  This is passive and very low risk (almost risk free).  Any RE option you select should be compared against this easy option.  For example, I would never select residential RE with the corresponding effort and risk without my pro forma shosing far greater projected return (such as 20%).

Educate on RE but also educate on other investment options.  My recommendation for the RE strategy for you to research is syndications.

Good luck



 

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David Dachtera
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David Dachtera
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Replied Mar 12 2023, 09:42
Quote from @Lenny Reinstein:

Even though I am almost 50 and work in finance in NY, I have zero practical experience with the real estate investment. Dreamed about real estate investing fore years... 

I would like to buy my 1st property and try it out. I cannot be in FL to manage, so will need to hire a management company.

And don't want to start with a large loan. Want to start small. Where could I buy a studio or 1br that is a ready to rent condition that would make sense with the current interest rates and market situation,  and what would be the price range? Would love your advise. 


As I'm sure you can imagine, the purchase price is not what determines the cash flow, though it does play a part.

You'll need to study up on analyzing properties so you can answer your own question.

Also, real estate investing is one thing. STR is the Hospitality Industry has has considerations of its own.

Lots of reading and studying to do ... :-) 

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Bob Stevens
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Bob Stevens
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Replied Mar 12 2023, 09:47
Quote from @Lenny Reinstein:

Even though I am almost 50 and work in finance in NY, I have zero practical experience with the real estate investment. Dreamed about real estate investing fore years... 

I would like to buy my 1st property and try it out. I cannot be in FL to manage, so will need to hire a management company.

And don't want to start with a large loan. Want to start small. Where could I buy a studio or 1br that is a ready to rent condition that would make sense with the current interest rates and market situation,  and what would be the price range? Would love your advise. 


 For about 100- 110k you can get 12- 14k NET income,,,, so 10% +++ net cap 

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Lenny Reinstein
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Lenny Reinstein
Replied Mar 12 2023, 09:48
Quote from @David Dachtera:
Quote from @Lenny Reinstein:

Even though I am almost 50 and work in finance in NY, I have zero practical experience with the real estate investment. Dreamed about real estate investing fore years... 

I would like to buy my 1st property and try it out. I cannot be in FL to manage, so will need to hire a management company.

And don't want to start with a large loan. Want to start small. Where could I buy a studio or 1br that is a ready to rent condition that would make sense with the current interest rates and market situation,  and what would be the price range? Would love your advise. 


As I'm sure you can imagine, the purchase price is not what determines the cash flow, though it does play a part.

You'll need to study up on analyzing properties so you can answer your own question.

Also, real estate investing is one thing. STR is the Hospitality Industry has has considerations of its own.

Lots of reading and studying to do ... :-) 

The honest truth is that the reason I am writing here, asking questions is to shorten the "reading and studying process" and leverage the experience of others.  

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Lenny Reinstein
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Lenny Reinstein
Replied Mar 12 2023, 09:50

 For about 100- 110k you can get 12- 14k NET income,,,, so 10% +++ net cap 


 That is more than sufficient for my goals. Even 5% would make me happy. I don't want to buy my 1st property and lose big time. That's my main concern.

What property/properties and where would you recommend at this price range? 

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Lenny Reinstein
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Lenny Reinstein
Replied Mar 12 2023, 09:52
Quote from @Bjorn Ahlblad:

Up top on the left you will see a tab, Education, start there, look at some podcasts. Don't buy anything until you know what you are doing. Be patient.

Cheapest, meaning cheapest that is good, safe & reliable. It can be 100K, 200K, 300K. I am patient, and that's why I am asking for advice before putting any of my money at risk. 

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Shawn McCormick
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Shawn McCormick
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Replied Mar 12 2023, 10:22

@Lenny Reinstein congrats on finding BP and getting started on your journey. I've read thru the comments and there is good practical advise here. Based on your original post, sounds like condos would be about all that is in your price range in the Orlando market. That will bring up the issues of cash flow due to high HOA fees that are associated with them and another hurdle will be finding a condo that is warrantable in that price range.

If you have a rent analyzer tool (BP has one at the top of the page), you can find properties that match your budget and criteria and practice the numbers. You can get the help from a Realtor or find most of the info on the big home search sites. Make sure to factor in the 10% of rent for a property manager, always go a little higher on taxes and insurance than you think too (especially in Fl). 

One thought would be if you could bump up your budget to mid 300's, new construction homes would be a good way to go for you...new home with warranties, tenants willing to pay for a new home, little to no repairs/maintenance for years to come. Easy to manage.

Hope this helps, best of luck!

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Bob Stevens
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Replied Mar 13 2023, 05:55
Quote from @Lenny Reinstein:

 For about 100- 110k you can get 12- 14k NET income,,,, so 10% +++ net cap 


 That is more than sufficient for my goals. Even 5% would make me happy. I don't want to buy my 1st property and lose big time. That's my main concern.

What property/properties and where would you recommend at this price range? 


 5% why bother? All you need to do is connect with those that provide rental properties in the mid-west

Good luck 

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Jaron Walling
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Jaron Walling
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Replied Mar 13 2023, 06:06

@Lenny Reinstein You can leverage experience from others only so far. There's smart people in the forums and from my experience they will see right through post like this. I'll take a different approach. 

You said you work finance in NY, yet only have access to $80k?...?

Have you rented your entire life? 

Why choose Florida and OOS investing with no experience? 

I think you're aiming for difficult targets. I'd pick a local market and get knee deep in the weeds. I'd learn as much as I can by searching, reading, and networking with local professionals. Find an easier target, a base hit, and something that fits your buy box. 

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Ricardo Hidalgo
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Ricardo Hidalgo
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Replied Mar 13 2023, 16:04
Quote from @Lenny Reinstein:

Even though I am almost 50 and work in finance in NY, I have zero practical experience with the real estate investment. Dreamed about real estate investing fore years... 

I would like to buy my 1st property and try it out. I cannot be in FL to manage, so will need to hire a management company.

And don't want to start with a large loan. Want to start small. Where could I buy a studio or 1br that is a ready to rent condition that would make sense with the current interest rates and market situation,  and what would be the price range? Would love your advise. 


 Panama City Beach has options under 350k near the beach generating 45-55k in gross rentals for short term rentals. 

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Theresa Harris
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Replied Mar 13 2023, 16:16

I'll echo what some others said-you don't want the cheapest house.  On paper they look great, but in reality, they have many more problems.