Financing turnkey with portfolio lenders - numbers don't add up

[Randall Johnson]

Hi,

I am new to real estate investing and looking to get my feet wet with Turnkey properties. I have been crunching the numbers on some properties and the numbers just don't seem to add up.

I've got estimates from multiple portfolio lenders and they are offering me interest rates in the 7%-8% range. At those numbers there doesn't seem to be much cash flow at all. Note that I have a good credit score but I do have a foreclosure on my record from 2015 which prevents me from going the conventional mortgage route.

For example a house I am looking at sells for $110K and the rent is $1095. This is 1% rent-to-value which seems OK. However assuming a 7.5% interest rate on 20% down, and saving 5% Capex/5% repairs/7% Vacancy/10% management I actually end up with slightly negative cash flow. So what's the point?

Does anyone have any advice on how to deal with this situation? How do other people finance out of state turnkey properties when they can't get a conventional mortgage and still make the numbers work?

Thank you!