Average Net Cash Flow ? (Per door)
Investor & Agent · Tulsa, OK · Member since 2016 · 1k+ posts · 1k+ votes
Average Net Cash Flow ? (Per door)
Most Popular Reply
Irvine, CA · Member since 2016 · 545 posts · 614 votes
7yI agree with @Joe Villeneuve regarding the additional metrics. @Nate Sanow I looked at a deals for a guy last week and he was reflecting cash flow of $208.75 in month two of having a tenant.
I said I don't see at what point in the timeline you Break-even and actually start making money, He asked what I meant, he said I get a tenant in the second month in my analysis, that's when I start to cash flow. I told him until you get all of your initial cost (closing cost, purchase cost, down payment, etc..) You don't have any cash flow, you have reimbursed owner funds received from rent in the amount of $208.75, you basically prepaid the rent for the tenant at closing and they are paying you back in monthly installments until all of your cash is out of the deal.
I showed him he doesn't have true cash flow until year 7 on the deal when he gets his $18,800 in cash out of the deal (down payment, closing cost, etc). With the caveat that he doesn't have to purchase a CapEx items early based on monthly set-asides or rehab a trashed property beyond normal wear and tear.
So in Joe's defense, your question is asking for "Net Cash Flow" which will include the need to factor in all cash initially invested being out of the deal. A person with a property in year 1 or 2 saying they have $400 a month in cash flow means they are missing a key metric in the information they are giving you unless the deal was100% financing and the only cost they paid out of pocket is the inspection cost, appraisal cost, and closing cost.
If you're doing a BRRR the timeline gets shorter to start cash flowing but most deals do not cash flow early on.
98 Replies
- 7yLevi T.Pro MemberRental Property Investor · Tucson AZ / Nice FR / Washington DC · Member since 2016 · 1k+ posts · 1k+ votes
Originally posted by @Kenny Kamdoum:
@Levi T.sweet deal man. And I agree, 100 doors at 200+ is much better that 10 doors at 900. I see you also buy MF, how much per door do you get with those type of deals?
Two recent MF deals we did located in NOVA. $840 a door for 10 unit building, and we are doing a little over $300 per door on the 34 unit with capital returned, and debt services on both.
We are fully vertical company. It’s the little things that add up. Im more interested in SF in bulk than MF.. my goal is to buy 100 SF units this year, with the long term goal of 1,000 per year.
- 7yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
Originally posted by @Syed H.:
Originally posted by @Joe Villeneuve:
Originally posted by @Syed H.:
Originally posted by @Joe Villeneuve:
Originally posted by @Syed H.:
Originally posted by @Ray Johnson:
I told him until you get all of your initial cost (closing cost, purchase cost, down payment, etc..) You don't have any cash flow,
This makes absolutely no sense.
What part don't you get?
I get it, it just makes no sense. An investments cash flow isn’t judged by being paid back your equity first. That’s not how investments are evaluated and compared by most people, and def not by most professional shops.
Anyways, I net $210/unit on my MF portfolio.
That’s with 25% down. Taking into account vacancy, mgmt, regular expenses, reserves, repairs, and my mortgage. Principal reduction isn’t included.
Profit doesn't happen until you get all the cash you put in back. When you put more money in (cash) upfront, you are only putting your cash flow in upfront...before you get it. REI should not be analyzed like other investments. If you do, you are missing out on most of the advantages, and rationalizing bad deals into good ones based on "%'s" instead of dollars. I've never spent a "%" in my life.
I disagree. A % = $. Your equity is still in the deal.
Anyways, let’s agree to disagree.
What do you plan on doing with your equity? Like you said, it is "still in the deal" and has no actual value/use until you get it "out of the deal". Until then, it is nothing more than a trophy.
- Developer · NY/NJ/PA · Member since 2018 · 758 posts · 935 votes7y
Originally posted by @Joe Villeneuve:
Originally posted by @Syed H.:
Originally posted by @Joe Villeneuve:
Originally posted by @Syed H.:
Originally posted by @Joe Villeneuve:
Originally posted by @Syed H.:
Originally posted by @Ray Johnson:
I told him until you get all of your initial cost (closing cost, purchase cost, down payment, etc..) You don't have any cash flow,
This makes absolutely no sense.
What part don't you get?
I get it, it just makes no sense. An investments cash flow isn’t judged by being paid back your equity first. That’s not how investments are evaluated and compared by most people, and def not by most professional shops.
Anyways, I net $210/unit on my MF portfolio.
That’s with 25% down. Taking into account vacancy, mgmt, regular expenses, reserves, repairs, and my mortgage. Principal reduction isn’t included.
Profit doesn't happen until you get all the cash you put in back. When you put more money in (cash) upfront, you are only putting your cash flow in upfront...before you get it. REI should not be analyzed like other investments. If you do, you are missing out on most of the advantages, and rationalizing bad deals into good ones based on "%'s" instead of dollars. I've never spent a "%" in my life.
I disagree. A % = $. Your equity is still in the deal.
Anyways, let’s agree to disagree.
What do you plan on doing with your equity? Like you said, it is "still in the deal" and has no actual value/use until you get it "out of the deal". Until then, it is nothing more than a trophy.
Not sure, if I get good terms, I'll refinance out.
My equity is useless for me until A) I run out of cash to buy deals B) Have more deals to reinvest in. Market is very tight right now where I invest for it to make sense for me. I am being extremely careful in the current market. If I pull out my money and leave it the bank the only thing that changes is my net income per month.
& Yes a trophy that gives me cash every month. Not too bad.
Like I said let's agree to disagree. We look at things differently.
- Investor & Agent · Tulsa, OK · Member since 2016 · 1k+ posts · 1k+ votes7y
@Joe Villeneuve I have an honest question. With your approach on my thread, is your goal to push people to be better by pointing out things that they didn't say, consider, etc? For example, in my case you told me "you forgot one very important qualifier" and I never responded and then "It's not a matter of being flexible. Either it is or it isn't" and then you said to @Syed H. "Until then, it is nothing more than a trophy" in reference to his equity.
I am not worried about defending myself, but in the case of Syed, I can see where what you said has a certain tone of criticism. Perhaps, this is the "big boys" room (big girls too) and it is your firm belief that your statements push people to greatness. If that is the case, I salute you on your endeavor.
I also will add that given that the goals of my original post were my own, I stand by my original criteria only being the simple net cash flow, and simultaneously that my goals had flexibility if someone wanted to add a formula that included certain expenses above PITI. Frankly, I am not saying that defensively just honestly.
Thanks for commenting and I hope to hear from you.
- Rental Property Investor · Tacoma, WA · Member since 2018 · 113 posts · 149 votes7y
Originally posted by @Joe Villeneuve:
What do you plan on doing with your equity? Like you said, it is "still in the deal" and has no actual value/use until you get it "out of the deal". Until then, it is nothing more than a trophy.
I realize that this question was not directed at me, but I'm struck by this question. For our business, equity is the very thing we are trying to build. With equity, we can purchase or trade up to larger properties. With equity, we don't need to borrow as much money and thus have better cash flow. We can borrow against equity to live on or purchase other property. The only downside to equity in real estate (compared to other assets) is that it is not particularly liquid.
For us, large amounts of equity in a property have driven us to do a 1031 exchange into a larger property and thus increase leverage, cash flow and tax advantages.
- 7yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
Originally posted by @Rhonda Wilson:
Originally posted by @Joe Villeneuve:
What do you plan on doing with your equity? Like you said, it is "still in the deal" and has no actual value/use until you get it "out of the deal". Until then, it is nothing more than a trophy.
I realize that this question was not directed at me, but I'm struck by this question. For our business, equity is the very thing we are trying to build. With equity, we can purchase or trade up to larger properties. With equity, we don't need to borrow as much money and thus have better cash flow. We can borrow against equity to live on or purchase other property. The only downside to equity in real estate (compared to other assets) is that it is not particularly liquid.
For us, large amounts of equity in a property have driven us to do a 1031 exchange into a larger property and thus increase leverage, cash flow and tax advantages.
Then it isn't equity anymore...is it?
"The only downside..." is a huge downside.
Where did you get your equity? Built up from the tenant's rent payments (and using that money to pay the mortgage), built up through appreciation (in which case all that equity is the same for everyone), or buy you buying it (moving cash from your bank to the house)...which isn't gaining anything. That "higher cash flow: is nothing more than you recovering the cash you put in from the bank. The difference is, that "liquid form" (cash) allows you to buy more rentals...and gain more cash flow.
...and isn't that what you are turning your equity into when you say "...purchase other property"? It's the equity turned into cash that gives you that ability...except it cost you nothing in the original form...cash. When you draw it out of the property, as a refi, you are now paying for it...interest.
- Developer · NY/NJ/PA · Member since 2018 · 758 posts · 935 votes7y
Originally posted by @Joe Villeneuve:
Originally posted by @Rhonda Wilson:
Originally posted by @Joe Villeneuve:
What do you plan on doing with your equity? Like you said, it is "still in the deal" and has no actual value/use until you get it "out of the deal". Until then, it is nothing more than a trophy.
I realize that this question was not directed at me, but I'm struck by this question. For our business, equity is the very thing we are trying to build. With equity, we can purchase or trade up to larger properties. With equity, we don't need to borrow as much money and thus have better cash flow. We can borrow against equity to live on or purchase other property. The only downside to equity in real estate (compared to other assets) is that it is not particularly liquid.
For us, large amounts of equity in a property have driven us to do a 1031 exchange into a larger property and thus increase leverage, cash flow and tax advantages.
Then it isn't equity anymore...is it?
"The only downside..." is a huge downside.
Where did you get your equity? Built up from the tenant's rent payments (and using that money to pay the mortgage), built up through appreciation (in which case all that equity is the same for everyone), or buy you buying it (moving cash from your bank to the house)...which isn't gaining anything. That "higher cash flow: is nothing more than you recovering the cash you put in from the bank. The difference is, that "liquid form" (cash) allows you to buy more rentals...and gain more cash flow.
...and isn't that what you are turning your equity into when you say "...purchase other property"? It's the equity turned into cash that gives you that ability...except it cost you nothing in the original form...cash. When you draw it out of the property, as a refi, you are now paying for it...interest.
You seem to like arguing for the sake of arguing. Equity is equity. Doesn’t matter how you get it.
We get your views. We have ours. You’re not speaking to people who have no experience. It’s obviously working for both of us. We can move on now.
- Rental Property Investor · Tacoma, WA · Member since 2018 · 113 posts · 149 votes7y
Joe, you seem to be saying that real estate equity has no value which means that ownership of real estate has no value. Basically, you are saying that only cash has value. I think that you are confusing the concept of value with the concept of "medium of exchange." I feel like we are spinning our wheels here.
- 7yKenneth GarrettPro MemberInvestor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
I feel certain markets are more challenging then others. You can make money in any market, but I choose to select markets that have better rated schools and and higher income ratios. It’s just a personal choice. You had asked me about Rockford since I self manage and Rockford is about an hour away it’s outside of my investment area. Rockford just as Chicago has good areas and not so good areas. If you know your market well enough then you can choose where your hard earned dollars are best spent.
Good Luck.
- Little Falls, NJ · Member since 2014 · 87 posts · 49 votes7y
@Nate Sanow
Maybe I didn’t see someone post the same.
-What really matters is the type of area.
You might get a great return in a D area ~Net 1k+ but you will work for it one way or another.
In an A area might just break even and have the tenants pay off your property, but hardly hear from the tenants.
Hope this helps...
- 7yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
Originally posted by @Rhonda Wilson:
Joe, you seem to be saying that real estate equity has no value which means that ownership of real estate has no value. Basically, you are saying that only cash has value. I think that you are confusing the concept of value with the concept of "medium of exchange." I feel like we are spinning our wheels here.
I never said it had no value. I'm just qualifying its value...and limiting it when it is stationary...as equity. What I'm saying is this. When you interject your cash into a property, and it becomes equity, it has the same face value as when it was cash. It's the same money, just in a different location.
Since all equity that is built with appreciation would be the same for anyone that owned that property, all equity would grow equally. Equity gained through appreciation isn't based on existing equity...it's based on property value, which doesn't change based on the existing equity. The differences are these:
1 - Equity is dead until you access it, when it becomes cash...the same cash that you originally had before you transferred it into equity. Except, when it was in your bank it cost you nothing to use it. When you get it back through a refi, it now costs you...to use the same money that was free when it was in your bank and liquid.
2 - Cash in the bank, has an exponential gain potential that equity does not.
Note that when I refer to equity being dead, I'm not saying it has no value, it just has no growth. Any growth in that property is not based on existing equity...it's based on the property value. That growth is the same...regardless of how much equity is existing.
- Member since 2016 · 13k+ posts · 12k+ votes7y
We see these threads often and for the most part the responses are pure BS. Investors fail to properly include long term expenses, never consider amount of equity sitting dead, never account for the truly unexpected etc. Their cash flow is a arbitrary number that is made up to stroke their own ego.
Obvious some stating their cash flow is $100-$200 per door may be close to realistic but any thing beyond that is pure fantasy. It is usually falsely inflated by having low to no leverage. In this business no two investors can accurately compare cash flow unless they use identical systems for calculation and even then the number is only realistic in their own minds.
If you want to know what a accurate cash flow is in this business ask someone to calculate it after they sell their property. Until then all you are hearing is BS when someone firmly states my cash flow is ........
I know to this point in time I have positive cash flow, some is unfortunately artificial due to locked in equity, but to answer the question as to my actual positive cash flow...…. without a crystal ball it is impossible to answer.
I have a friend that has a mortgage free1M dollar property he rents for 5K per month. According to him his positive cash flow is over $2500/month. BS right unless you ignore reality..
- Rental Property Investor · Phoenix, AZ · Member since 2013 · 919 posts · 911 votes7y
Let’s say you have $500 a month positive cash flow for a property. How many YEARS will it take to pay yourself ‘back’ for that roof or pesky a/c unit that goes bad? I’m asking for a friend. ;-)
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Thomas S.:
We see these threads often and for the most part the responses are pure BS. Investors fail to properly include long term expenses, never consider amount of equity sitting dead, never account for the truly unexpected etc. Their cash flow is a arbitrary number that is made up to stroke their own ego.
Obvious some stating their cash flow is $100-$200 per door may be close to realistic but any thing beyond that is pure fantasy. It is usually falsely inflated by having low to no leverage. In this business no two investors can accurately compare cash flow unless they use identical systems for calculation and even then the number is only realistic in their own minds.
If you want to know what a accurate cash flow is in this business ask someone to calculate it after they sell their property. Until then all you are hearing is BS when someone firmly states my cash flow is ........
I know to this point in time I have positive cash flow, some is unfortunately artificial due to locked in equity, but to answer the question as to my actual positive cash flow...…. without a crystal ball it is impossible to answer.
I have a friend that has a mortgage free1M dollar property he rents for 5K per month. According to him his positive cash flow is over $2500/month. BS right unless you ignore reality..
exactly IRR is the metric.. and you wont learn your IRR until you exit.. when you have so many unknowns in rental properties. its all just blue sky proforma talk.. One crappy renter throws off your numbers for a year or two.. some renter does a number on your unit that could take your Positive cash flow for 5 years.. your saving cap ex at todays rates when in 10 years what you thought things cost will be higher than what your saving for. Of course most investor out of the gate say they will never sell they are in it forever.. but we know thats just wishful thinking properties in the US turn over on an average of every 7 to 8 years.. And when they do sell they have that little thing called recapture that many dont put in their up front proforma's.. The investors that have a decent handle on what they make are flippers and builders.. In out product is gone.. you made or lost X pretty simple.
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes7y
New purchases I need $300-400 self manage financed. Lots of factors play into cash flow. My paid off properties cash flow well over $1000 per door.
- Investor · Kansas City, MO · Member since 2017 · 96 posts · 82 votes7y
@Nate Sanow
1) purchased at $32,000 no money down mortgage $282/month rent $925/month HOA $196/ management fee $50/month —— total CASHFLOW $397/month
2) purchased $100,000 down payment $5000 rent 1,000/month management $50/month mortgage $656/month ———— total CASHFLOW $294/month
What do you guys think??
- Investor & Agent · Tulsa, OK · Member since 2016 · 1k+ posts · 1k+ votes7y
@Jason Waldo
Sounds great... I’m curious if you used private or hard
money for the zero down? I’ve read of some extending long term.
- Developer · NY/NJ/PA · Member since 2018 · 758 posts · 935 votes7y
Originally posted by @Brian Liscio:
@Nate Sanow
Maybe I didn’t see someone post the same.
-What really matters is the type of area.
You might get a great return in a D area ~Net 1k+ but you will work for it one way or another.
In an A area might just break even and have the tenants pay off your property, but hardly hear from the tenants.
Hope this helps...
I disagree to a certain extent. I’ve owned in both A, B, & C areas & have friends who invest in literally every area you could imagine.
Even in A/B markets, you can get hit with horrible tenants that will kill your cash flow for years. Unfortunately, many of the A/B tenants know how to game the system. Here in NY, where landlords are the villains, you can be screwed the same in both A & C areas. I’ve gotten totally screwed in a good area with one ****** tenant I inherited that on paper was amazing. 5)36 cost me $16k in damage and $7k in rent...
The only way to mitigate this is to screen your tenants property and I know this sounds crazy but go with your “gut”. You’ll still get screwed once in awhile, hopefully you hit a certain scale that factors that in.
- Developer · NY/NJ/PA · Member since 2018 · 758 posts · 935 votes7y
Originally posted by @Jason Waldo:
@Nate Sanow
1) purchased at $32,000 no money down mortgage $282/month rent $925/month HOA $196/ management fee $50/month —— total CASHFLOW $397/month
2) purchased $100,000 down payment $5000 rent 1,000/month management $50/month mortgage $656/month ———— total CASHFLOW $294/month
What do you guys think??
You need to include some vacancy, maintenance, replacement reserves, insurance. Any other town or city fees?
- Real Estate Consultant · Manassas Park, VA · Member since 2019 · 74 posts · 19 votes2y
Quote from @Matthew McNeil:
Originally posted by @Nate Sanow:
Hi all,
I know there's CAP rates, ROI / NOI, 1% rules, but in terms of cold hard dollars, I'd be fascinated to know what you average real life positive cash flow per door is, on average, per month. I'm just asking for my own selfish motivation / inspiration and to dial in a buy and hold strategy. It can be without expenses for simplicity sake. Or included.
Simply put: per rental do you get $100-$500 net cash per month? (Example dollar amount)
I'd prefer SFR examples, because obviously larger apartment deals while really juicy are also at a scale I myself cannot yet reach.
I’m also curious for those who have achieved early FI how many doors it took.
I tried to see if already on a forum but didn’t see it, so thanks in advance if you do respond!
My 3 SFRs avg real numbers:
I get $1075, 871 and 617 each door for a total of $2563 on those doors.
My long term strategy is buy-and-hold, and I Recast every couple of years. I also use Cashflow to invest in more SFHs.
Do you buy-and-hold out-of-state or in-state only?
- Real Estate Consultant · Manassas Park, VA · Member since 2019 · 74 posts · 19 votes2y
Quote from @Levi T.:
Originally posted by @Kenny Kamdoum:
@Levi T.sweet deal man. And I agree, 100 doors at 200+ is much better that 10 doors at 900. I see you also buy MF, how much per door do you get with those type of deals?
Two recent MF deals we did located in NOVA. $840 a door for 10 unit building, and we are doing a little over $300 per door on the 34 unit with capital returned, and debt services on both.
We are fully vertical company. It’s the little things that add up. Im more interested in SF in bulk than MF.. my goal is to buy 100 SF units this year, with the long term goal of 1,000 per year.
How are you able to buy that many SF units per year?
- Real Estate Consultant · Manassas Park, VA · Member since 2019 · 74 posts · 19 votes2y
Quote from @Jason Waldo:
@Nate Sanow
1) purchased at $32,000 no money down mortgage $282/month rent $925/month HOA $196/ management fee $50/month —— total CASHFLOW $397/month
2) purchased $100,000 down payment $5000 rent 1,000/month management $50/month mortgage $656/month ———— total CASHFLOW $294/month
What do you guys think??
Is this both a subject-to deal? If so, what is their interest rate? How long until the mortgage is paid off? What is the growth rate in that area? How old are the roofs and the HVAC systems? What are the taxes and insurances?
Join the conversationCreate a free account to reply, vote on answers and follow this thread.