Looking for Cash Flowing Rentals for Under $200k

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Looking for Cash Flowing Rentals for Under $200k

Richard WilkinsonPro Member
Investor · Los Angeles, CA · Member since 2015 · 11 posts · 23 votes

I'm a Los Angeles based Realtor w/ 17 years of experience and I am looking to invest out of California.  At this point I would like to keep each purchase under $200k.  Can anyone recommend any markets where one can make a purchase for $200k or less and still have positive cashflow?

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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
2y

@Richard Wilkinson

Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.

If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.

If you buy/renovate a Class A property in Class D area, what quality of tenant will you get?

Similarly, if you put all Class D tenants in a Class A 4-plex, what do you think will happen?

So, when investing in areas they don’t really know, investors should research the different property Class submarkets.

Here’s our OPINION for the Metro Detroit market (use as a template for your target area!) that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases.:

Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenant Pool: Majority will have FICO scores of 680+ (roughly 5% probability of default), zero evictions in last 7 years.

Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenant Pool: Majority will have FICO scores of 620-680 (around 10% probability of default), some blemishes, but should have no evictions in last 5 years

Class C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.
Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.

Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenant Pool: majority will have FICO scores under 560 (almost 30% probability of default), little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.

Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

The City of Detroit has 183 Neighborhoods we’ve analyzed.

PM us if you’d like to discuss this logical approach in greater detail!

[email protected]248-209-6824
Logical Property Management4.9459 Reviews
WebsiteView Page
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  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    @Richard Wilkinson

    unfortunately I think that, with interest rates where they are, it is basically not possible to meaningfully "cash flow" on a traditional long term rental, in a market you can't personally add any value to, with standard property management.

    if you're handy and self-manage, for example, you can keep management and repair costs down that way, but that's obviously not possible from thousands of miles away.  so you'll be paying market for management and repairs and if you go too far below the median in a market you might have heightened wear and tear and vacancy.

    is there a market you visit often, or went to college in, or have strong ties to?  i'd pick that way, versus just a random market based on a random median price that you don't know anything about.

    hope this helps

    8Reply
  • John Mason
    Member since 2024 · 1k+ posts · 351 votes
    2y

    People here usually talk about Columbus Cleveland Detroit etc..

    3Reply
  • Alfath AhmedBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2022 · 1k+ posts · 1k+ votes
    2y
    Quote from @Richard Wilkinson:

    I'm a Los Angeles based Realtor w/ 17 years of experience and I am looking to invest out of California.  At this point I would like to keep each purchase under $200k.  Can anyone recommend any markets where one can make a purchase for $200k or less and still have positive cashflow?


     I would look into the Indiana market. Tons of cashflow potential. 

    [email protected]614-802-5698
    ReafCo | Ahmed Group 536 Reviews
    WebsiteView Page
    1Reply
  • Patrick DruryBusiness Member
    Real Estate Agent · Columbus, OH & Cleveland OH · Member since 2021 · 1k+ posts · 2k+ votes
    2y

    @Richard Wilkinson
    If you are looking for cash flow the Midwest markets are solid like Cleveland and Columbus. In both of those markets, you can find rentals under 200k that are cashflow positive

    [email protected]614-412-4565
    Reafco-556 Reviews
    View Page
    1Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    2y
    Quote from @Richard Wilkinson:

    I'm a Los Angeles based Realtor w/ 17 years of experience and I am looking to invest out of California.  At this point I would like to keep each purchase under $200k.  Can anyone recommend any markets where one can make a purchase for $200k or less and still have positive cashflow?


     Entire Midwest playa. Cleveland, Detroit, Toledo, Indy etc......Throw a dart at a map and you'll find a town that you can do that in.

    4Reply
  • Richard WilkinsonPro Member
    OP
    Investor · Los Angeles, CA · Member since 2015 · 11 posts · 23 votes
    2y
    Quote from @Alfath Ahmed:
    Quote from @Richard Wilkinson:

    I'm a Los Angeles based Realtor w/ 17 years of experience and I am looking to invest out of California.  At this point I would like to keep each purchase under $200k.  Can anyone recommend any markets where one can make a purchase for $200k or less and still have positive cashflow?

    Thank you for taking the time to respond, Alfath!

     I would look into the Indiana market. Tons of cashflow potential. 


    0Reply
  • Richard WilkinsonPro Member
    OP
    Investor · Los Angeles, CA · Member since 2015 · 11 posts · 23 votes
    2y
    Quote from @Nicholas L.:

    @Richard Wilkinson

    unfortunately I think that, with interest rates where they are, it is basically not possible to meaningfully "cash flow" on a traditional long term rental, in a market you can't personally add any value to, with standard property management.

    if you're handy and self-manage, for example, you can keep management and repair costs down that way, but that's obviously not possible from thousands of miles away.  so you'll be paying market for management and repairs and if you go too far below the median in a market you might have heightened wear and tear and vacancy.

    is there a market you visit often, or went to college in, or have strong ties to?  i'd pick that way, versus just a random market based on a random median price that you don't know anything about.

    hope this helps


     Great advice!  Thank you, Nicholas!

    0Reply
  • Richard WilkinsonPro Member
    OP
    Investor · Los Angeles, CA · Member since 2015 · 11 posts · 23 votes
    2y
    Quote from @James Wise:
    Quote from @Richard Wilkinson:

    I'm a Los Angeles based Realtor w/ 17 years of experience and I am looking to invest out of California.  At this point I would like to keep each purchase under $200k.  Can anyone recommend any markets where one can make a purchase for $200k or less and still have positive cashflow?


     Entire Midwest playa. Cleveland, Detroit, Toledo, Indy etc......Throw a dart at a map and you'll find a town that you can do that in.


    0Reply
  • Richard WilkinsonPro Member
    OP
    Investor · Los Angeles, CA · Member since 2015 · 11 posts · 23 votes
    2y
    Quote from @Richard Wilkinson:
    Quote from @James Wise:
    Quote from @Richard Wilkinson:

    I'm a Los Angeles based Realtor w/ 17 years of experience and I am looking to invest out of California.  At this point I would like to keep each purchase under $200k.  Can anyone recommend any markets where one can make a purchase for $200k or less and still have positive cashflow?


     Entire Midwest playa. Cleveland, Detroit, Toledo, Indy etc......Throw a dart at a map and you'll find a town that you can do that in.


     THank you, James!


    0Reply
  • Evan HoppleBusiness Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2023 · 284 posts · 420 votes
    2y

    @Richard Wilkinson

    Most investors in today's market find positive cash flow by updating a property that needs minor improvements, that are discounted accordingly. You can find these deals in most midwest markets. I'd invest in a market that has metrics to support long-term growth, population, and job growth, to name a few. 

    [email protected]614-924-8151
    Reafco Real Estate
    View Page
    2Reply
  • Jimmy LieuBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
    2y
    Quote from @Richard Wilkinson:

    I'm a Los Angeles based Realtor w/ 17 years of experience and I am looking to invest out of California.  At this point I would like to keep each purchase under $200k.  Can anyone recommend any markets where one can make a purchase for $200k or less and still have positive cashflow?


    Hi Richard! I personally suggest looking into the Columbus OH market. We're still seeing deals here at $120k-$180k price point that have positive cash flow along with potential for appreciation due to the growing economy. This is why my out-of-state clients love it here and why I moved here from Portland OR. Now I own my own rentals and grew my portfolio to over 7 figures. Happy to connect and answer any questions you may have.

    [email protected]614-300-7535
    Jimmy Lieu, Red 1 Realty4.9120 Reviews
    WebsiteView Page
    1Reply
  • Samuel DioufBusiness Member
    Real Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes
    2y

    Cleveland is a great market to invest in if you're looking for cash-flow. You'll find an abundance of cash-flowing properties under $200k. I highly suggest working with an investor friendly agent so you don't buy in the wrong locations.

    Columbus is another market where you can find this. The appreciation is better in Columbus than Cleveland as well, but the cash-flow won't be as good.

    [email protected]614-662-1652
    Reafco - Samuel Diouf528 Reviews
    WebsiteView Page
    0Reply
  • Tim Ryan
    Investor / Mentor / Contractor · Arcadia, CA Buying Out of State · Member since 2015 · 655 posts · 622 votes
    2y

    Hi Richard,  I think it's amazing as we see the same cities being promoted all the time. I tend to be a contrarian and not follow the crowd.  We should connect as I'm in the Pasadena area. Get a coffee?  I can tell you my story.  Finding out of state cash flow properties under $200 - yes!

    4Reply
  • Joe DerobertisPro Member
    Altadena, CA · Member since 2014 · 70 posts · 42 votes
    2y
    Quote from @Tim Ryan:

    Hi Richard,  I think it's amazing as we see the same cities being promoted all the time. I tend to be a contrarian and not follow the crowd.  We should connect as I'm in the Pasadena area. Get a coffee?  I can tell you my story.  Finding out of state cash flow properties under $200 - yes!

    Can I join you guys!  I’m in the Pasadena area too!!!
    0Reply
  • Account Closed
    Member since 2024 · 10 posts · 2 votes
    2y

    Detroit is good for rental, I have some if your interested

    0Reply
  • Thomas Heepke
    Member since 2023 · 4 posts · 1 vote
    2y

    As an alternative to Ohio, check out the Oshkosh/Appleton, WI area.  They have strong jobs market, beautiful area, low prices (relatively speaking), and everything anyone could want.  Also, they're quite short on housing and building apartments like crazy - as seems to be the case everywhere I've been in the last 3-5 years around the midwest (and likely beyond).

    1Reply
  • Isaura Orellana
    Specialist · DETROIT · Member since 2019 · 116 posts · 243 votes
    2y

    Hi Richard! I highly recommend looking into the Detroit, Michigan, market. We're still seeing deals here at the $150K-$200K price point that have positive cash flow/COC returns as well as steadily increasing appreciation thanks to the growing economy and massive amounts of building and construction taking place everywhere you turn, not to mention the growing population for the first time in decades. The enormous demand to purchase rental properties here in Detroit has also grown immensely. Detroit is undergoing revitalization efforts that are continuously gaining national and international attention. Also, Detroit has demonstrated a special sort of resilience over the years that many aren't aware of. The spirit is high, and it truly is experiencing a resurgence. With the booming tourism and plenty of local attractions, as well as a general higher quality of life than there's been in the past 50 years, they have all played a significant role in greatly lowering the risk for investors and lenders alike in this ever-growing market where one can still enjoy the 1% rule and government-guaranteed Section 8 rent. So all that being said, Detroit is an excellent choice when looking to purchase giant, bolstrous character-driven brick rental properties that are second to none for below $200K. Furthermore, with the recent lower mortgage rates and the steady increase in demand, this all continues to push the market here in a positive direction. And let's just talk about downtown Detroit itself for one quick moment; it's in much better shape than, let's say, downtown Los Angeles or many of the other big west coast cities that are drowning in homelessness, death, and decay at an ever precedented rate. Detroit is much more modern and bussling with tech, innovation, and spirit than one would ever imagine. These are just some of the reasons why my out-of-state and out-country clients love it here. Happy to connect and answer any and all questions you may have.

    1Reply
  • Travis Biziorek
    Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
    2y

    Hey Richard, I'm doing a lot of them in Detroit still (and I live in California).

    Detroit still has cash flow, although it is getting increasingly difficult to find. The best way to find deals is to add value via a BRRRR type strategy. This is what I help out of state investors do with my team on the ground in Detroit.

    We're generally seeing SFH's in the $80k-$90k range all in and duplexes in the $110k-$130k range. Then we're seeing appraisals from $100k - $120k on SFH's and $150k+ on duplexes.

    I literally had a client email me yesterday. His duplex appraisal came in at $206k and he was in for $160k total. Not bad!

    In terms of net cash flow, you'll see anywhere from $100 - $200 per door. And it can definitely go lower if you have a high equity deal (e.g. that duplex I just mentioned). 

    I'm in the camp where I'd rather get as much of my capital back as possible and operate closer to break even.

    It should be noted that net cash flow includes all expenses... that means a line item for capex/repairs/vacancy as well (lots of folks don't do this in their numbers).

    Finally, I can talk for hours about Detroit. The city is crushing it and going through a major revitalization. I personally own 12-doors there and I'm under contract for another duplex currently.

    I've been buying there since 2019 and I have some decent equity in my properties. I'm starting to do cash out refi's on them to buy more.

    Happy to talk any time or share a bunch of resources about the market there.

    3Reply
  • Wayne Chou
    Member since 2024 · 4 posts · 0 votes
    2y
    Quote from @Tim Ryan:

    Hi Richard,  I think it's amazing as we see the same cities being promoted all the time. I tend to be a contrarian and not follow the crowd.  We should connect as I'm in the Pasadena area. Get a coffee?  I can tell you my story.  Finding out of state cash flow properties under $200 - yes!

    Hi Tim, may I connect with you for advice.  I'm in Los Angeles.  I'm interested in learning what a seasoned investor's matrix and strategy look like and out out of state opportunities. Thanks.

    0Reply
  • Mike Fingleton
    Real Estate Agent · Scottsdale, AZ · Member since 2024 · 155 posts · 103 votes
    2y
    Quote from @Richard Wilkinson:

    I'm a Los Angeles based Realtor w/ 17 years of experience and I am looking to invest out of California.  At this point I would like to keep each purchase under $200k.  Can anyone recommend any markets where one can make a purchase for $200k or less and still have positive cashflow?


    Hi Richard,

    Great to see you're expanding your investment horizons! There are several markets where you can find properties under $200k that offer positive cash flow. Here are a few you might consider:

    1. Indianapolis, Indiana: Known for its affordable housing and strong rental market, it's a favorite among investors.
    2. Cleveland, Ohio: Offers low property prices with good rental demand, which can lead to solid cash flow.
    3. Kansas City, Missouri: This city has a growing economy and affordable real estate options.
    4. Memphis, Tennessee: With reasonable property taxes and strong rental demand, it could be a good fit.
    5. Pittsburgh, Pennsylvania: Has a diverse economy and properties that fit within your budget.

    I spoke with a colleague yesterday who invested in Indianapolis and was pleased with the positive cash flow from rental properties there. It might be worth exploring!

    Best of luck on your investment journey! 

    Cheers,

    Jasper, the Pat Boukhaled investor team,
    Turning investment visions into reality in Phoenix, AZ - ranked #1 for residential real estate growth and opportunity by PwC.

    Mobile: (480) 531-837


    0Reply
  • Michael MinerBusiness Member
    Real Estate Broker · Rome, NY · Member since 2015 · 8 posts · 6 votes
    2y

    Hello

    We have dozens here in Central NY and the Mohawk valley. I picked up a 3 bed 1.5 bath for $25,000 with $38,000 rehab. I currently have it rented for $1,800 per month. Grabbed a trailer park with 18 units ($425 lot rent) and 4 vacant lots for $140,000 with a commercial store front ($1,100/m) with city water sewer and gas. I've been selling real estate here for over 20 years and started investing in 2015. Something to look into if you are serious about adding doors.

    3Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    2y
    Quote from @Richard Wilkinson:

    I'm a Los Angeles based Realtor w/ 17 years of experience and I am looking to invest out of California.  At this point I would like to keep each purchase under $200k.  Can anyone recommend any markets where one can make a purchase for $200k or less and still have positive cashflow?

     Of course, You can get a SF for about 115kish, with 1500- in rent, Or a Duplex for about 135k with 1800- 2k in rent. I am closing next week on 3, 2 SF 75k, and 80kish all in .Rents will be 1500ish for one, and 1800ish for the other, Duplex ALL IN 135kish, Rent will be 1800- 2k. I went to contract yesterday on a 3 br for all in 95k, rent will be about 1800.  Best part I'm OOS. 

    All mine are 15-20% NET income. You can get 10- 15% net income, 

    All the best

    1Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    2y
    Quote from @Nicholas L.:

    @Richard Wilkinson

    unfortunately I think that, with interest rates where they are, it is basically not possible to meaningfully "cash flow" on a traditional long term rental, in a market you can't personally add any value to, with standard property management.

    if you're handy and self-manage, for example, you can keep management and repair costs down that way, but that's obviously not possible from thousands of miles away.  so you'll be paying market for management and repairs and if you go too far below the median in a market you might have heightened wear and tear and vacancy.

    is there a market you visit often, or went to college in, or have strong ties to?  i'd pick that way, versus just a random market based on a random median price that you don't know anything about.

    hope this helps


     Hmm All in 80k, with 1500 in rent, ALL IN 130K with 2k in rent, These will cash flow, great,





    0Reply
  • Account Closed
    Rental Property Investor · Duluth, MN · Member since 2021 · 16 posts · 6 votes
    2y

    @Richard Wilkinson I can get you what you are looking for in my market. I am in Cancun for BPcon at the moment but if you message me we can chat once I am back on the tenth.

    0Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    2y

    I know many that have purchased 100s in the Midwest over the last 10 years, 

    1Reply
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