High price but huge cash flow ?

4 Replies

My answer is yes....a big one.  No question.  I have offered more for a property because of the cash flow.  Remember, If the property has positive cash flow (and in your case HUGE), I'm not paying the mortgage.  That means I'm not buying the property...my tenant is.  All I'm paying for is what comes out of pocket...the DP.

Here's how I did one:  Seller financed

1-  AP = $100k, with 20% DP...I paid $108k w/ 10% DP
2 - Cash Flow with Mortgage from $108k buy = $750/month
3 - My Down Payment was $10,800 instead of $20k, so I paid almost $10k less for the property.

...yes, I paid almost $10k less.  My tenant paid the rest.  I gave the buyer more money (through offer and interest income), but I saved almost $10k cost to me, with higher CF, in the process.

Is the lease above market?  If they leave in a year can you replace them with a new tenant paying that same amount?

I'd rather buy a cheap place based on a below market lease, so I can eventually collect the upside.  

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