what is average cash flow on your single family homes?

Question

Hello Just wondering what your guys average cash flow was on your single family homes? Your true cashflow monthly after all payments taxes and insurance? And what do you feel is a good monthly flow  300?  400? or higher? Just debating purchasing another sfh and monthly flow would be around 250-300 after expenses just wondering if its worth it?

Jeremiah B. · Answer

For years our first and only rental lost about 250 per month and I have no regrets about that decision as it was better than the alternative and still in line with our goals.

Today we average about 100 per on each of our two rentals.  It may not be much by its a big win for us.

Shanequa J. · Answer

I like at leat $300. I think I'd go down to $100 for the following reasons; it hasn't happened though: the downpayment is small or none (seller financing); the repairs are minimal, the mortgage is almost paid off (subject 2), or I can later sell within a year for a good profit.

Mark Updegraff · Answer

I shoot for $300 after all expenses AND after 25% off the gross for repair / maint / vacancy.  I'll sacrafice some cash flow for location and equity capture.

Happy New Year!

Barrington Gallahad · Answer

This is a question that relates to roi. If you want a higher return on investment you may want higher cashflow. If you are looking to own a property in a nice area and are attempting to play the game of appreciation then less cashflow might be ok. A beach front rental  in San Diego will not cashflow the way a 4 unit apt building in an older working class hood might in Indiana like Indianapolis.  The beach home could cost 1.5 million and generate 3k a month in rent. The 4 unit could cost 140k and generate the same 3k in rents per  month.  Without a huge down pmt obviously the beach home would be a negative cash flow situation. You have to decide how liquid your investment needs to be. An old 4 unit in a working class hood may be a lot less liquid then a beach front rental in a warmer climate. I want cashflow so I pay cash for older rehabs at tax sale. I will pay 1500 to 5k for a 2000 sqft 3 to 4 bedroom home that needs less then 10k to fix up. Then after investing my 12k or so into property I get about 700 to 900 in rent. I am in southern Indiana Ohio river valley. I recently watched over 100 homes sell at auction all for under 5k. These homes will be great fix and rent for those that bought them. 
   The challenge with old homes in older hoods is they are lacking liquidity. Getting your hands on your equity is a case of getting monthly rents not doing a refinance. Risk/Reward is the question how much risk do you want. Obviously a strip mall 100% occupied with excellent anchors in place make the investment a low risk and probably a lower ROI as result.
   The older home, duplex or 4 unit that sits in the older working class hood would generate a higher ROI and be a greater risk as well as lacking liquidity compared to the strip mall. 
   My 12k brings me 6k in rents after expenses annually on average gaining me 50% on my investment. If I had 200k to put down on a strip mall my numbers would probably not bring me over 12% return. Unless the strip mall was empty and it was a turn around. Higher risk = higher returns. Managing older homes in working class hoods is far riskier then managing the nicest strip mall in town. If you dont have large amounts of cash laying around the smaller deals make more sense. You can limit risk by sticking to better working class hoods avoid ghettos. Duplexes are great for starting investors and bring better returns then sfh's.  
   I know that not all parts of the country are equal in cash flow. I left my home town to search for better cash flow because I got tired of high prices,high property taxes and low returns. I moved 500 miles south and am now in a area I can buy buildings for under 15k that yield almost the same rents as buildings I was paying 50k for up north.
  Money flees taxes and low returns.  That is why I see Calif license plates where I am now in southern Indiana.

Ziv Magen · Answer

Barrington - would love to see the spreadsheet for one of those 50% AFTER EXPENSES deal - not to be confrontational, but sounds like fantasy land to me.

Robert Steele · Answer

This is going to of course depend on how much financing you use and the rent of the property so this number is pretty much meaningless. But what the hey, mine is $466 and I probably wouldn't structure a deal unless I could make at least $300.

Other measures such as capitalization rate, return on investment, return on equity, rate of return and return on assets might make for better comparisons. My average cap rate is 8.1%

Rob K. · Answer

My average is $525 with rentals ranging from $575 per month up to $1,200 per month. 2/3 are free and clear, which makes a big difference.

I have a land contract that I purchased off a guy that I know who needed money. He had sold a house to a woman on a land contract and her balance was $31,000 and was paying just under $500 per month PITI at 11% interest. The contract had 23 years left and was open ended. I purchased the note for $15,000. I then turned around and took out a private mortgage for $15,000 at 7% interest for five years. I only make $22 per month, but all I do is receive one check and write another. My investment is zero and once the private loan is paid off in another three years, I will net $315 per month (after paying taxes and insurance) for the next eighteen plus years. It's not much money now, but it will pay off nicely over time. Sometimes you need to think like a farmer.

I have three rentals that were purchased before the market crashed. I net less than $200 each on those. It's totally not worth it to deal with tenants and repairs for under $200 per month. The good thing is that they were all switched to fifteen year loans in 2003. Once they are paid off, the cash flow will be a lot better. Sometimes you make a bad deal, or buy at the wrong time, and just need to wait it out. Real estate is very forgiving.

Callum K. · Answer

I focus on higher end properties with more stable tenants and mine are producing on average $750 per month.  Most of my properties rental rates are in the range of $1600 - $2400 per month and are typically SFR's 4/3/2.  I do have several condo's producing roughly $300 per month, but my exposure is lower due to shared potential expenses.  I only bought those outright to help increase my income without acquiring debt for the DTI lending requirements.

Ty Golera · Answer

For me it's ROI after ALL expenses which includes vacancy and repairs. What you come in with should be a minimum of 20% then you calculate your Cash on cash returns. It's gotta be better than equity markets or MM accounts.  I agree with Barrington.
If you follow those markets you have to expect a dip in prices soon as demand has increased (with a perpendicular chart up) in many areas around the country. However, I see more listings with price drops lately as flippers investing in suspect areas are not winning that gamble.

Marc Bodinger · Answer

I agree with Barrington Gallahad in that it should depend on your ROI. Wouldn't local markets have an effect on cash flow numbers? I would think $300/month in one market might be great but might be terrible in another.

what is average cash flow on your single family homes?

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