I need to change strategies. What should I do?
Member since 2024 · 23 posts · 19 votes
I need to change strategies. What should I do?
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Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votesIf you want a 3% return, honestly put it in the bank in a good savings account. With the current interest rates, you'll get a better return. No you won't benefit from the tenant paying down your mortgage or the house appreciating, but you also won't have to deal with tenants, maintaining the home, etc.
47 Replies
- 1yMarc RiceBusiness MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
Quote from @Ivan Castanon:
For the past 6 months I’ve been looking for houses (both SF and MF) that can produce at least a little bit of cashflow with around 20% - 30% down.
However, I’ve started to realize that this is pretty much impossible these days.
I currently have $110k sitting in my bank ready to be invested but I just can't find anything that will at least produce a 3% COC return. I've been looking for properties in and around Tampa, Orlando, and St Pete but I can't find anything that's worth it.
I’m starting to realize that I need a new strategy. I can’t keep looking for properties that will cashflow because I feel like I’m wasting my time at this point. I really want to invest in RE but I just don’t know what to do. Any recommendations? What other ways can I invest in RE in the current market.
Try a house hack there and rent out the bedrooms.
Marc Rice | Investor Friendly Agent at Reafco Tailwind Team574 Reviews - 1yWale LawalBusiness MemberReal Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
You're right—finding cash-flowing properties in Tampa, Orlando, and St. Pete has become tough with rising prices and high interest rates. However, from my experience working with 400+ investors, there are still ways to maximize returns. You can target value-add deals (BRRRR, rehab, house-hacking), explore short/mid-term rentals, or expand to secondary markets like Ocala, Lakeland, or Jacksonville. Creative financing (seller financing, DSCR loans) and passive options like REITs or syndications are also worth considering.
Good luck!
NETWORTH BUILDERS5236 Reviews - 1yRobert EllisBusiness MemberDeveloper · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
Quote from @Ivan Castanon:
For the past 6 months I’ve been looking for houses (both SF and MF) that can produce at least a little bit of cashflow with around 20% - 30% down.
However, I’ve started to realize that this is pretty much impossible these days.
I currently have $110k sitting in my bank ready to be invested but I just can't find anything that will at least produce a 3% COC return. I've been looking for properties in and around Tampa, Orlando, and St Pete but I can't find anything that's worth it.
I’m starting to realize that I need a new strategy. I can’t keep looking for properties that will cashflow because I feel like I’m wasting my time at this point. I really want to invest in RE but I just don’t know what to do. Any recommendations? What other ways can I invest in RE in the current market.
We have about 10 clients in your situation. What we came up with was an infill product that matches what three story walk ups are in the multifamily market. We build a stacked triplex in columbus ohio but you could do it anywhere that land makes sense. I'm looking in miami florida for sites where we could get the numbers to work and we are getting close maybe in homestead. with that you could continue to pull cash out after it was built. in our market we need about .1 acres and we get land under 60k that the investors buy. the build cost is about 75% of appraised value or a little less. the investor refinances out on a DSCR loan and continues on. this strategy is ground up and it takes advantage of the buyers market for land in our market. I would look at new construction or build to rent but make sure to run the numbers. work with builders who can keep build costs under $200 per sq ft and look for areas where land is less than 10% of after built value. I looked at some land in Tampa awhile back but their zoning seemed a bit more strict so we stuck to our market since I wasn't local.
Section 8 Launch52 Reviews - New to Real Estate · Canton, OH · Member since 2024 · 3 posts · 0 votes1y
So the average rate of return on the Vanguard Admiral Mutual Fund is 10%, the average rate of return on bitcoin is 40%. I'm hoping I've completely misunderstood your question, because just about every mutual fund and crypto investment is several times over 3 percent
- Realtor · Charlotte, NC · Member since 2023 · 245 posts · 231 votes1y
It's certainly a tough market right no. Insurance rates and interest rates are making it really difficult to find deals that work. I imagine the price points in the markets you're currently targeting are pretty high in comparison to other areas.
Are you open to out of state investing? If not, are you able to cash flow if you shifted to an STR or MTR strategy in your market?
When working with other investors, it is really important for me to know what your goals are. Scaling quickly, cash flow, appreciation, location/staying local, self-management, etc. All of that matters.
- Memphis, TN · Member since 2023 · 100 posts · 24 votes1y
Hi Ivan,
It might be a great time to explore out-of-state investing. Consider researching markets like Memphis, which offer stable economies and more affordable properties. Turnkey companies can simplify the process and help you invest remotely. Let me know if you'd like to connect and discuss strategies!
- Real Estate Agent · Tampa Florida · Member since 2013 · 630 posts · 303 votes1y
I am in the Tampa area as well!!! Have you thought about trying to do a sub-to or any sort of partnership to do a BRRRR. If you have the right people in place it can still be done. You just have to get creative! I'm happy to help!
- Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes1y
Congratulations on saving 110K! For now, put it in a money market. Keep doing what you are doing and you will find a deal. Stay diligent!
- 1yTodd AndersonPro MemberReal Estate Agent · Cape Coral, FL · Member since 2023 · 392 posts · 175 votes
I have worked with a number of investors that have found the same thing in the Tampa area. prices are so high it is tough to make things work at 7% interest.
What the investors that I work with have found is if you go a bit outside the Tampa area into smaller growing markets you will be able to find investments that work. We have found this primarily with new builds. Builders are able to offer incentives that you can't find on the secondary market. Most important to investor rates as low a 3.75% interest.
With this type of investment many investors find that they can get a new property that they don't have to put money or work into. It also performs well because the renters like a new property in a growing area. We are seeing all the properties on our inventory cash flow.
Florida is still a good market because of the sustained growth and the landlord friendly atmosphere. let me know if you want to talk more about the markets that I see investors liking best.
Best of luck.
- Investor · Cleveland, OH · Member since 2013 · 120 posts · 77 votes1y
I would say private lending. You get the best of both worlds.
- Memphis, TN · Member since 2024 · 180 posts · 223 votes1y
Have you explored out of state investing options? I have many FL clients that have changed markets to Memphis because of the lower taxes, higher cash flow, and lower entry points.
I work with out of state investor clients every day that cannot make deals work in their current markets, so they've moved to Memphis. Happy to connect and discuss how Memphis could be a good fit for you.
Hope this helps.
- Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes1y
Curious what scenario you would choose,
A. Find a solid deal in your market after negotiating you get 3% COC, 1% debt paydown, and say the market appreciates 4% for the next 5 years with 100k down on a 400k asset that would be say 16k+ a year. In five years that 100k has got you 15k+ (hopefully rents went up, paid off 10k+ in debt and your asset has appreciated 80k+. Lots of depreciation you will pay no tax maybe even shield some W2 income.
B. 8k maybe 10k if you pick the right guy to lend your money to in interest income you will be paying much higher tax rate on this income FYI no depreciation expense. Say you get to keep 6-7k after tax.
I like Option A all day long. In 5 years and almost certainly in 10 years Scenario A can change your life. Option B who cares don't spend your time vetting deals for a premium put it in a CD or index fund and go make more money.
- Member since 2019 · 60 posts · 31 votes1y
@Eric Bilderback, absolutely property ownership is the way for most of us to build long term wealth. It is just harder today in most markets than it has been recently. Private lending, if done effectively could give a beginner the contacts, experience and market insight to be ready for the right value add buy and hold.
- Property Manager · Rockford, MI · Member since 2024 · 4 posts · 0 votes1y
Michigan has several great markets to invest in. Take a look at Grand Rapids, Kalamazoo, Lansing, Muskegon and Detroit. We have a lot of success in these markets with our investors
- Member since 2025 · 1 post · 1 vote1y
Quote from @Jimmy Lieu:
Quote from @Ivan Castanon:
For the past 6 months I’ve been looking for houses (both SF and MF) that can produce at least a little bit of cashflow with around 20% - 30% down.
However, I’ve started to realize that this is pretty much impossible these days.
I currently have $110k sitting in my bank ready to be invested but I just can't find anything that will at least produce a 3% COC return. I've been looking for properties in and around Tampa, Orlando, and St Pete but I can't find anything that's worth it.
I’m starting to realize that I need a new strategy. I can’t keep looking for properties that will cashflow because I feel like I’m wasting my time at this point. I really want to invest in RE but I just don’t know what to do. Any recommendations? What other ways can I invest in RE in the current market.
Hi Ivan! I would recommend taking a look at Columbus Ohio! With $110k cash, you can easily buy 2-3 positive cash flowing rentals here. The macroeconomics are on fire here - population growth, job growth, and companies moving and developing here. For example Intel headquarters, Google, FB, Amazon, Nationwide, Honda, (recently Anduril announced another 4k jobs to Columbus). Additionally, the price point is still cheap enough to find the 1% rule and positive cash flow and there's amazing appreciation potential. Lastly, the price point is still very cheap here in the sense that you can still find investment deals that hit the 1% rule for 120-180k! Happy to connect and answer any questions you have!
I started looking at investing in Ohio. Can you give some insight on how to find property managers, agents or even how to inspect the properties if someone is a long distance investor?
- Real Estate Agent · Lansing, MI · Member since 2020 · 172 posts · 93 votes1y
@Ivan Castanon I may be biased, but I recommend you look into the Lansing, MI market. Our average market price for a solid 1-4 unit rental is around the $150k - $175k range. Not a ton of appreciation, but cash flow is steady and easily attainable.
I'm more than happy to have a call / Zoom with you to discuss a little more in depth! - Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes1y
OOS investing is hard. Anything you do remote will come at a cost of operational inefficiencies and a higher cost of doing business. I could tell you to invest in Milwaukee, you can still find cash flow positive duplexes here in good neighborhoods around 350k and we have had very consistent 8% appreciation over the last years. Look up Milwaukee real estate market on YouTube.
However. My team works with a good amount of OOS investors and over the years a pattern has emerged. Financially it only makes sense to invest remote if you have a sufficiently large economic delta between the market you live/work and Milwaukee. For example, we have a lot of Chicago investors look into Milwaukee, but it never makes good financial sense, because the difference is not large enough. If you live in CA, NY, Boston etc - the financial difference is big enough.
Investing in your home town is always best, you have the home-field advantage and you can buy, rehab and manage a lot more efficiently. In your case, you are probably better off buying a break-even deal in Tampa then a deal with $200 cash flow OOS. Over time your Tampa investment will start to cash flow. Look at it as a piggy bank.
I should probably add, that I do the same thing here: most of what I bought in the last 3 years does not much better than break even, but I am buying in the best possible neighborhoods that still work as a rental.
- Member since 2024 · 23 posts · 19 votes1y
Quote from @Shiloh Lundahl:
Hi @Ivan Castanon. A lot of people are giving you advice without enough context as to what you would like to do other than get a higher than 3% cash on cash return and other than only putting down 20% - 30% as a down payment.
Something that is important to know to give proper suggestions is what you want the investment to do for you and how active you want to be in the investment.
In general, the more active you are, the higher your return, the less active you are, the lower the return because you pay for others to do that work for you. Information like: Do you want to manage the property yourself, or do you want to pay a property management company to do that for you, is important to know because it will start to narrow your options.
If you want to be more of an active investor, finding the deal yourself direct from a seller, doing some of the work yourself to fix it up, and then representing yourself to sell it on your own is probably the most active you can be and will give you the highest return in the shortest amount of time. Also, co-living situations or top performing short-term rentals can produce a pretty high cash on cash return but again they are pretty active with a high turnover of tenants and guests unless you find someone else to manage them and then you are usually paying a good portion of the profits to the manager.
But let's say that you have a job and are not interested in fixing and flipping or a high turnover type of investment and you would rather be a more passive investor. If that is the case, here are some more passive, yet higher return options.
1. As@Chris Seveney suggested, being a private money lender can be pretty passive once you find the operator and asset you feel comfortable with. You can get between a 12% and 15% cash on cash return each year pretty passively. But what is really important is that you understand the terms of the loan, including the length of time and when you can expect to get the money back, how it is secured, and the process of getting it back if things don't go as planned with the investment. Vetting the operator or borrower is very important. Make sure that that person has a lot of experience, and make sure that there is at least 20% - 25% equity over and above the amount that you have lent and in your agreement it states that they can have no other liens or loans on top of yours. Also, make sure that they have money in their accounts in case things don't go as planned. You don't want to get a call 3 months into a project where you have lent money and hear the operator say that they ran out of money and need more money from you to finish the project or you will lose your investment. But if you can find a good operator and feel good about the asset, then private money lending can be an excellent way to invest passively. I have done this probably over 100 times as the borrower and it has worked out well for me and my private money lenders in that everyone has gotten paid back along with the agreed upon interest.
2. Putting your money into a fund or syndication. This is similar to being a private money lender. You need to vet the investment and the operator. In some syndications, returns may be higher than 15%, but it can be more risky in that there are usually many people involved and if the operator doesn't perform as originally explained then the process of getting your money back can be a little more tricky. I haven't personally done a syndication so I can't comment much more from experience.
3. As @Dennis McNeely stated you could partner up with someone else on a deal or deals. For example, a buddy of mine called me the other day and told me that his accounted told him that he should buy some real estate to offset some of his taxes. I gave him some ideas of what he could do depending on if he wanted to be more passive or more active. After explaining a couple of options he told me he would rather just partner up with me and be the money partner and I would be the operating partner. So we opened up an LLC and he funded it with $100,000. I then found 3 properties from wholesalers in areas that I invest in regularly and purchased the properties with a hard money loan. We used his money as the down payment and to fix up the properties. We have stabilized 2 properties so far and we are in the middle of the refinance on the second. We will finish with the rehab on the third in about a month or 2 and then we will refinance that one as well. The cash flow won't be that high on these properties initially, but we are not planning on keeping them long term. We have placed tenant buyers in the property on lease options so we get a little higher rents and the tenant buyers take care of the property repairs. The option period is for 3 years. We set the purchase price at about 10% higher than todays value and we don't have to pay for realtor fees or closing costs when we go to sell the property. We also connect them with loan officers to help get the tenant buyers ready to purchase the property within the option time frame. Each of the properties have an estimated profit of around $70,000. So the total estimated profit is $210,000 in 3 years. So a profit of around $105,000 each in 3 years. So about a 35% cash on cash return for my buddy each year on his $100,000. Now I realize that not all situations will go exactly as planned but it is important to have a realistic plan from the beginning based on past results.
Ivan, Hopefully this post was helpful to you in that it helped you consider different options based on your personal situation and real estate investing goals. Let me know if I can be of help to you on your journey.
Thank you! Is the 20% - 25% equity over the amount lent based on the ARV or current purchase value of the property?
- 1yShiloh LundahlPro MemberRental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
ARV.
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