Can one buy a rental home that cash flows from day 1

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Can one buy a rental home that cash flows from day 1

Rigo Medina
Arlington, TX · Member since 2016 · 113 posts · 10 votes

As a newbie, it would be great to buy a rental home that cash flows positive from day 1. Has anyone bought a rental home that cash flowed $300 net from day 1? The ideal scenario would be that the rental home is already occupied by tenants and does not need rehab work.

I've been told that those deals are out there and they are usually from a tired landlord that just wants to get out of being a landlord.

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Tyler HodgsonBusiness Member
Investor · Flower Mound, TX · Member since 2016 · 246 posts · 194 votes
10y
Yes! I closed on my first rental property last month and have collected two months rent already and my first mortgage payment isn't until Aug 1. My net cash flow after mortgage and escrows will be $390. And in Sept rent is going up by $100, so that's $490 cash flow. It was a lucky opportunity that I stumbled upon and took action to snatch it up quickly. The key is to position yourself to be ready so that when a sweat deal comes up you don't miss out. Good luck!
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  • Kevin Schulte
    MHP Investor · Green Valley, AZ · Member since 2013 · 85 posts · 26 votes
    10y

    thats not uheard of but it isn't something you'll likely find on the mls or craigslist , direct mail or just knocking on doors after finding owners from the country records might be the way to go. Youll need an off market deal.

    Also I dont know your market but people arent just leaving equity on the table , so be prepared to put aome sweat or money in doing fixups yo get it truly "rent ready"

    Are you networking locally yet?

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  • Aisha E.
    Architect, Green design/build consultant · Fort Worth, TX · Member since 2015 · 62 posts · 12 votes
    10y
    Rigo Medina , there are investors who do just that, and also provide property management to boot. There are quite a few in the DFW area.
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  • Elizabeth Colegrove
    Hanford, CA · Member since 2013 · 5k+ posts · 1k+ votes
    10y

    Look at turn key, many people love them. Personally I would rather buy a great deal on the mls and install my own tenant. I get to reap the benefits of a under value house, and than put a tenant that "I" have installed. All of the houses we have bought as pure investments have made that much money from day 1. Plus they had a significant amount of equity too!

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  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    10y

    ll the time.  My minimum is $350/month

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  • Bill Manassero
    Rental Property Investor · Mission Viejo, CA · Member since 2014 · 230 posts · 113 votes
    10y
    Ditto for me as well. All my properties - 28 doors - cash flowed from day one. It's all in setting your criteria before you buy. Don't settle for less!
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  • Rigo Medina
    OP
    Arlington, TX · Member since 2016 · 113 posts · 10 votes
    10y

    @Kevin Schulte

    Thanks for the information. I am starting slow. I am in the learning and exploring stage now. It seems like I learn a new way each time I log into BP and my brain is thinking of other ways too.

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  • Rigo Medina
    OP
    Arlington, TX · Member since 2016 · 113 posts · 10 votes
    10y

    @Aisha E.

    @Elizabeth Colegrove

    @Joe Villeneuve

    @Bill Manassero

    Thank you all. The fixer ups are my initial choice.

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  • Tyler HodgsonBusiness Member
    Investor · Flower Mound, TX · Member since 2016 · 246 posts · 194 votes
    10y
    Yes! I closed on my first rental property last month and have collected two months rent already and my first mortgage payment isn't until Aug 1. My net cash flow after mortgage and escrows will be $390. And in Sept rent is going up by $100, so that's $490 cash flow. It was a lucky opportunity that I stumbled upon and took action to snatch it up quickly. The key is to position yourself to be ready so that when a sweat deal comes up you don't miss out. Good luck!
    1Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    10y

    The key is to find the right micro-market...and camp out there.  The properties will find you

    1Reply
  • Account Closed
    Contractor · Simsbury, CT · Member since 2014 · 54 posts · 13 votes
    10y

    same here! Bought my first deal March 9th. Got paid the pro rated rent for March at closing. I collected April and mays rent and made my first mortgage payment on May 1st. Profited around 6,000$ before my first payment was due.

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  • Rigo Medina
    OP
    Arlington, TX · Member since 2016 · 113 posts · 10 votes
    10y

    @Tyler Hodgson

    Was this an off market deal or how did you stumble across the sweet deal? That would be a great success story for you to post here on BP.
    Congratulations!

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  • Rigo Medina
    OP
    Arlington, TX · Member since 2016 · 113 posts · 10 votes
    10y

    @Account Closed

    Awesome! Was your deal an off market deal?

    How long were you on the search for this deal?

    Congratulations to you as well. Post your success here on BP.

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  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes
    10y

    I have all the time. But that happens when you pay cash. If you buy something cash and it can't cash flow high numbers you have done something seriously wrong. Note that cash flow is not the same as your rate of return. You could buy a house for $1 million, rented for $1k/month with taxes & insurance of $5k annual and it would cash flow $350+ per month. That doesn't mean it's a good rate of return. Some people park cash in real estate for nominal returns for diversification or other reasons. 

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  • Jean Pierre
    Hollywood, FL · Member since 2015 · 65 posts · 11 votes
    10y
    The goal is to always buy a property that cash flows on day 1.
    0Reply
  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    10y

    That's exactly what turnkeys offer. They are all I've ever bought and I love them.

    0Reply
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