What's your cash flow strategy for 2024?

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What's your cash flow strategy for 2024?

Alex Rodgers
Investor 路 Los Angeles, CA 路 Member since 2023 路 10 posts 路 15 votes

Hi everyone,

I've been looking for properties for months and am still having trouble finding properties that cash flow. I'm aware that with high interest rates and the crazy rates of appreciation we've experienced within the past few years it's almost impossible to find something on the MLS, but I'm not sure what other strategies are working right now. What strategies have you used successfully in the past year to aquire a cash flowing property? Did you go through a wholesaler? Did you buy a MTR/STR? I'd love to hear about your experience!

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Michael Dumler
Real Estate Agent 路 Atlanta, GA 路 Member since 2020 路 1k+ posts 路 1k+ votes
2y

@Alex Rodgers, over the past two to three years, my clients and I have been implementing the investment strategy of rent-by-the-room in Atlanta, GA. It's a high-risk, high-reward strategy and is not for everyone, if I'm being honest. That being said, these deals are absolute cash cows. For further insight, research rent-by-room companies such as HomeRoom and PadSplit. Moreover, I'd be happy to chat if you want to learn more. FYI, many of these deals come directly from the MLS. With challenging market conditions, investors are forced to get creative. Those who aren't getting creative are buying negative cash flow/break-even or acquiring their deals off-market.

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  • Michael Dumler
    Real Estate Agent 路 Atlanta, GA 路 Member since 2020 路 1k+ posts 路 1k+ votes
    2y

    @Alex Rodgers, over the past two to three years, my clients and I have been implementing the investment strategy of rent-by-the-room in Atlanta, GA. It's a high-risk, high-reward strategy and is not for everyone, if I'm being honest. That being said, these deals are absolute cash cows. For further insight, research rent-by-room companies such as HomeRoom and PadSplit. Moreover, I'd be happy to chat if you want to learn more. FYI, many of these deals come directly from the MLS. With challenging market conditions, investors are forced to get creative. Those who aren't getting creative are buying negative cash flow/break-even or acquiring their deals off-market.

    6Reply
  • Alex Rodgers
    OP
    Investor 路 Los Angeles, CA 路 Member since 2023 路 10 posts 路 15 votes
    2y
    Quote from @Michael Dumler:

    @Alex Rodgers, over the past two to three years, my clients and I have been implementing the investment strategy of rent-by-the-room in Atlanta, GA. It's a high-risk, high-reward strategy and is not for everyone, if I'm being honest. That being said, these deals are absolute cash cows. For further insight, research rent-by-room companies such as HomeRoom and PadSplit. Moreover, I'd be happy to chat if you want to learn more. FYI, many of these deals come directly from the MLS. With challenging market conditions, investors are forced to get creative. Those who aren't getting creative are buying negative cash flow/break-even or acquiring their deals off-market.

    Thanks Michael, what are the high-risks of rent-by-room?
    0Reply
  • Ashton Hines
    Real Estate Agent 路 Carrollton, TX 路 Member since 2022 路 29 posts 路 19 votes
    2y

    You will definitely have more options if you are open to the STR and MTR world. It's not for everyone because of the more hands on management it entails but the returns can blow most long term rentals out of the water right now. I just sold a MTR to an investor in the DFW area and we were able to find something that was priced well enough to absorb some rehab, still be an ARV that would allow him to exit in about a year if needed and house hack in the mean time if the MTR does not produce well enough.

    That being said there are still close to 1% deals on the DFW MLS (I just sent 5 to an investor to check out) and smaller markets that are cheaper on the front end but have a good rental base because of a college or military base are good places to look. Think isolated towns that are still a hub for rural communities, have a decent medical base, a college or two or three or military nearby.

    Hope this helps. 

    2Reply
  • Michael Dumler
    Real Estate Agent 路 Atlanta, GA 路 Member since 2020 路 1k+ posts 路 1k+ votes
    2y

    @Alex Rodgers, that fact that you could have anywhere from five to eight unrelated individuals living together under one roof. 

    1Reply
  • Jon Puente
    Lender 路 Charlotte, NC 路 Member since 2020 路 224 posts 路 221 votes
    2y

    Hey Alex, 

    From what I am seeing and hearing from the agents/investors that I work with, a lot of investors who own properties are starting to transition from LTR to MTR/STR model, and housing professionals/nurses + the occasional booking on Airbnb/VRBO.

    A lot of real estate right now does not cashflow or meet the 1% rule, so unless you buy at 70% ARV (or below) and add value, you are probably not cash-flowing at all.

    The only way it would make sense to have little cashflow is if the location is PRIME and you are betting on appreciation over the next 5 years. Even then, its hard to justify. 

    Great discussion!

    1Reply
  • V.G JasonPro Member
    Investor 路 Member since 2022 路 3k+ posts 路 3k+ votes
    2y

    Or you just put more money down?

    Who says it needs to be a STR/MTR? If everyone is going that route, that's going to crush future prospects. It'll just oversaturate it. People tend to follow the money, but don't realize where they are in the curve. Likely by now, since the rates started going up in H2 '22, you're behind the curve if you are pivoter.

    4Reply
  • Mike PaolucciBusiness Member
    Realtor 路 Columbus Cleveland Dayton, OH 路 Member since 2022 路 498 posts 路 553 votes
    2y

    If the numbers aren't working on local properties, try exploring out of state investing. Check out the Ohio markets (Columbus, Cleveland, Cincinnati, Dayton, Toledo, etc...). I've been finding deals that are cashflow positive, even with a little TLC. 

    Good luck on your property search! 

    [email protected]614-892-9184
    Reafco - Mike Paolucci 512 Reviews
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    4Reply
  • Josh Bowser
    Real Estate Agent 路 Atlanta, GA 路 Member since 2020 路 416 posts 路 233 votes
    2y

    Rent by the room on Padsplit / Homeroom is killing it for clients on the cashflow side. Happy to chat specifics!

    4Reply
  • Carlos Ptriawan
    Member since 2019 路 7k+ posts 路 4k+ votes
    2y
    Quote from @Alex Rodgers:

    Hi everyone,

    I've been looking for properties for months and am still having trouble finding properties that cash flow. I'm aware that with high interest rates and the crazy rates of appreciation we've experienced within the past few years it's almost impossible to find something on the MLS, but I'm not sure what other strategies are working right now. What strategies have you used successfully in the past year to aquire a cash flowing property? Did you go through a wholesaler? Did you buy a MTR/STR? I'd love to hear about your experience!


     sell home and invest between the 3rd to 6th every month into TSLY/CONY

    0Reply
  • Anthony L Amos Jr
    Real Estate Agent 路 Columbus | Toledo 路 Member since 2019 路 608 posts 路 768 votes
    2y
    Quote from @Alex Rodgers:

    Hi everyone,

    I've been looking for properties for months and am still having trouble finding properties that cash flow. I'm aware that with high interest rates and the crazy rates of appreciation we've experienced within the past few years it's almost impossible to find something on the MLS, but I'm not sure what other strategies are working right now. What strategies have you used successfully in the past year to aquire a cash flowing property? Did you go through a wholesaler? Did you buy a MTR/STR? I'd love to hear about your experience!

    Cleveland and Toledo have plenty of cash flowing deals. 
    2Reply
  • Eric Gerakos
    Investor 路 Costa Mesa, CA 路 Member since 2016 路 1k+ posts 路 1k+ votes
    2y

    Instead of fighting the high interest rates, take advantage of them by buying secured first trust deeds currently paying 9.5%. Buy when rates are low, lend when rates are high.

    4Reply
  • Engelo RumoraBusiness Member
    Investor 路 Toledo, OH 路 Member since 2013 路 4k+ posts 路 2k+ votes
    2y
    Quote from @Mike Paolucci:

    If the numbers aren't working on local properties, try exploring out of state investing. Check out the Ohio markets (Columbus, Cleveland, Cincinnati, Dayton, Toledo, etc...). I've been finding deals that are cashflow positive, even with a little TLC. 

    Good luck on your property search! 


    Definitely loving my Toledo market 馃憤

    Just trying to get a solid B class 6 unit across the line for $160,000.

    Occupied but needs around $50,000 or so in rehab.

    Optimized will rent for $4,500+ per month and ARV will be $350,000 - $400,000

    Haven't found a deal like this in ages but either way you look, the numbers in the market just make sense and even with the high interest rate environment.

    Much success to all

    Podcast Guest on Show #89
    Oz Realty4.5369 Reviews
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    0Reply
  • Engelo RumoraBusiness Member
    Investor 路 Toledo, OH 路 Member since 2013 路 4k+ posts 路 2k+ votes
    2y
    Quote from @Anthony L Amos Jr:
    Quote from @Alex Rodgers:

    Hi everyone,

    I've been looking for properties for months and am still having trouble finding properties that cash flow. I'm aware that with high interest rates and the crazy rates of appreciation we've experienced within the past few years it's almost impossible to find something on the MLS, but I'm not sure what other strategies are working right now. What strategies have you used successfully in the past year to aquire a cash flowing property? Did you go through a wholesaler? Did you buy a MTR/STR? I'd love to hear about your experience!

    Cleveland and Toledo have plenty of cash flowing deals. 

    Agreed.

    Just need to know where to look 馃檹

    Ohio, Michigan and Indiana would be my go markets for cashflow.

    Podcast Guest on Show #89
    Oz Realty4.5369 Reviews
    WebsiteView Page
    2Reply
  • John MorganPro Member
    Rental Property Investor 路 Grand Prairie, TX 路 Member since 2018 路 2k+ posts 路 2k+ votes
    2y

    @Alex Rodgers

    I focus on SFR. I just bought 6 within the last 3 months from a wholesaler. But have bought a couple properties off the MLS within the last 14 months. I target C+ class SFR since they appreciate better and have higher cash flow in my area (Dallas).

    0Reply
  • Sam McCormackBusiness Member
    Real Estate Agent 路 Cincinnati, OH/NKY 路 Member since 2021 路 1k+ posts 路 833 votes
    2y
    Quote from @Alex Rodgers:

    Hi everyone,

    I've been looking for properties for months and am still having trouble finding properties that cash flow. I'm aware that with high interest rates and the crazy rates of appreciation we've experienced within the past few years it's almost impossible to find something on the MLS, but I'm not sure what other strategies are working right now. What strategies have you used successfully in the past year to aquire a cash flowing property? Did you go through a wholesaler? Did you buy a MTR/STR? I'd love to hear about your experience!


     Cincinnati has some good properties posted! Let me know if you are interested so we can talk about your preferences for investing and I can get some info for you!

    [email protected]859-443-4952
    Sam McCormack Realtor
    View Page
    0Reply
  • Bruce Lynn
    Real Estate Broker 路 Coppell, TX 路 Member since 2011 路 5k+ posts 路 4k+ votes
    2y
    Quote from @Alex Rodgers:

    Hi everyone,

    Cash flow is just a function of what down payment you use.  In my area right now, probably most homes in decent neighborhoods will not cash flow with minimal down payments.  Right now for most investors in my area I am advising to plan on spending 30-40% for down payment if you need break even or cash flow.  Rents will likely catch up at some point, but prices have shot up faster than rents.   On the flip side, we are seeing people stay for longer, which means lower expenses for lease up, make ready, and vacancy.   

    Almost every one of my investors only buy off of MLS. While you might be cheaper off the MLS, it costs you a lot of money and time to do that. You might spend $3000/month or more mailing post cards, and making a ton of phone calls, or just driving for $.

    Buying from many wholesalers is risky. As much as 70% of the deals wholesalers bring to title, don't close, so you could very well loose your earnest money, as well as any expenses you put out for inspection, option money, contractor bids, survey, etc. Rarely do i see any good deals from wholesalers...I mean good for the end buyer. Also you have to be aware that some of the "wholesale" deals were actually purchased off MLS and just recycled with that marketing term. Ever been to a wholesaler showing where 20-30 investors are there bidding at 3pm? To me that is very much "on the market" just not on MLS. Lots of people excited and bidding too much.

    The other option is if you have cash is to buy at the foreclosure auction.  Typically there are no loans....all cash, same day.

    If you can withstand the headaches and risks, I do see a few people killing it with rent-by-the-room.  One guy I saw turned 5 bedroom house to his room and took the 4 others and made it 8bedrooms and something like $50/night.  It's probably not really scalable, but you can build up a big pile of cash for 1 year or 2 or 3.

    3Reply
  • Bonnie LowPro Member
    Lender 路 Asheville, NC 路 Member since 2016 路 1k+ posts 路 1k+ votes
    2y

    Buying off the MLS is difficult right now. Paying retail with current interest rates makes it very difficult to cash flow. Now is a good time to start networking with wholesalers and learning how to source off market deals. Bottom line is you have to work a lot harder to find deals but they're out there.

    [email protected]
    4Reply
  • David M.
    Morris County, NJ 路 Member since 2020 路 5k+ posts 路 2k+ votes
    2y

    @Alex Rodgers generated wealth through long term rentals.  Then, liquidate to pivot to debt investing to generate cash.

    Here is one thread I've just posted some about (cont reading down):  https://www.biggerpockets.com/forums/48/topics/1170072-what-...

    I'll keep just this short as maybe this isn't what you were asking for in your OP.

    2Reply
  • Sam YinPro Member
    Los Angeles, CA 路 Member since 2021 路 584 posts 路 738 votes
    2y
    Quote from @Eric Gerakos:

    Instead of fighting the high interest rates, take advantage of them by buying secured first trust deeds currently paying 9.5%. Buy when rates are low, lend when rates are high.

    I like this strategy.
    1Reply
  • Jake BakerBusiness Member
    Flipper/Rehabber 路 San Diego, CA 路 Member since 2020 路 1k+ posts 路 695 votes
    2y

    @Alex Rodgers

    We do 20 Flips/BRRRRs per year in Jacksonville FL and we use a hybrid approach. It is also very hard to "perfect BRRRR" here.

    We BRRRR 8-10 per year and the flips supplement and money left in the BRRRRs.

    How do we choose which ones to BRRRR? - Location. It is not about how much is left in the deal for me. It is about the long-term appreciation of the asset.

    [email protected]
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    5Reply
  • Dan H.Pro Member
    Investor 路 Poway, CA 路 Member since 2015 路 7k+ posts 路 8k+ votes
    2y

    theoretically: coop off loading 75% of RE at a price of over 85% of purchase price.  The 25% of RE still owned is in effect purchased at 40% discount allowing cash flow and full extraction of investment providing infinite return.  This is targeted in high priced markets.

    Can you cash flow if you purchased at a 40% discount?

    Good luck

    0Reply
  • John MorganPro Member
    Rental Property Investor 路 Grand Prairie, TX 路 Member since 2018 路 2k+ posts 路 2k+ votes
    2y

    @Alex Rodgers

    I bought 6 cash flowing SFR from a wholesaler and 2 off market SFR from another investor that cash flow well in the last year. And 2 SFR off the MLS 14 months ago that cash flow well in Dallas and one SFR from a wholesaler around the same time that came with tenants and cash flow well.

    1Reply
  • Marcus Auerbach
    Investor 路 Milwaukee - Mequon, WI 路 Member since 2010 路 5k+ posts 路 7k+ votes
    2y
    Quote from @Jake Baker:

    @Alex Rodgers

    We do 20 Flips/BRRRRs per year in Jacksonville FL and we use a hybrid approach. It is also very hard to "perfect BRRRR" here.

    We BRRRR 8-10 per year and the flips supplement and money left in the BRRRRs.

    How do we choose which ones to BRRRR? - Location. It is not about how much is left in the deal for me. It is about the long-term appreciation of the asset.

    Yes. Quality locations, properties I actually WANT to own!

    I do the same here in Milwaukee. Even tough our prices are lower, BRRRR's have gone negative equity (most anyway, on average) 3 years ago, because the market does not allow for enough discount to match condition. So you get a 30k discount for 60k of work, that does not make sense. We only have 1 month of inventory, so everything sells. Sellers have no reason to give a discount for condition.

    One solution is to go off market and into rough neighborhods. That's not my cup of tea and also very risky and capex may exceed cash flow if you don't spend enough on rehab up front.

    My last few personal purchases all involved circumstances that gave me an edge: at this point I look for properties that need minimal work: instead of a 6 months rehab, I already get 5 months of rent. And I have little work. All the major components have been done like roof, windows, kitchens, baths. Either simply overpriced and sat for months not willing to reduce the list price, but willing to take a (reasonably) lower offer. Or deals that had fallen through and the seller was willing to take 30k less in exchange for a no contingency offer.

    1Reply
  • Carlos A.
    Investor 路 South Florida 路 Member since 2020 路 36 posts 路 30 votes
    2y

    2 things that have been stated already, but have worked for me:

    1. Bigger down payment. I know nowadays the rage is all low/no money down deals, and maybe I'm just not educated in that world enough to find the deals and get them done, but quite frankly for me it's been having enough cash in the bank to put down substantial downs that allow for monthly cash flow.

    2. Leverage your network. Tell everyone you know and random people you see around town that you are looking to buy properties. It seems like one of those "too good to be true" things, but I have purchased 3 out of 5 properties that I currently own/rent out through people I know bringing friends, relatives, their distant friends etc.

    best of luck! 

    1Reply
  • Evan HoppleBusiness Member
    Real Estate Agent 路 Columbus Cleveland Dayton, OH 路 Member since 2023 路 284 posts 路 420 votes
    2y

    @Alex Rodgers

    Spread your search out to tertiary markets or even out of the state. Cashflow deals are still out there

    [email protected]614-924-8151
    Reafco Real Estate
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    2Reply
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