What is your expected Cash Flow?

Question

Just getting started in purchasing rental properties and wanted to get an idea on what you expect for a minimum on a yearly/monthly cash flow return. For single or multi family. No more than 4 plex. Thanks

JD Martin · Answer

I have SFHs. If I cannot net more than 10% on my cash invested (outside of tax considerations) and have >50% monthly cash flow after all expenses including the note I won't do the deal. Example: SFH I purchase for $40k cash outright, I expect to net >$4k annually on rent and all expenses should be <50% of the monthly rent (i.e. rent = 600, expenses < 300).

I know there are all kinds of rules on here - 1%, 2%, 50%, whatever - but that is what I use and it works for me. Everything I have nets >15% on my cash invested and expenses are <40% of monthly rent. This allows me to have a built-in vacancy protection rate of 60-70%, meaning that rent from one unit can cover all expenses on vacancies that high, which is catastrophic, armeggedon-type vacancy figures for my area!

Corey Knight · Answer

Thank you again for all your post! Each example is helping me with the education and new ideas!

Peter Tverdov · Answer

I want 15% ROI as a minimum (if financing) so its usually 10k-20k per year that I want to clear before taxes. All cash would be closer to 8%-10% probably. I prefer to have the opportunity to "force appreciation" and walk into some equity. If the house is right next to mine I might consider 12-13% because I'd like to own enough close together to knock them all down in the future and build an apartment building. I own in C-D neighborhoods though.

Joshua D. · Answer

We shoot for $300 per house in my area. Hard to find those deals in our area, but we are growing slow. so we have time.

Account Closed · Answer

You will be more successful if you learn the difference between profit and cash flow and concentrate on profit.

Tommy DeSalvo · Answer

When I first bought my 4plex it was cashflowing about $50/unit/month. I've made some improvements and it's now at about $75 with my goal to be at $100/unit/month within a year.

Corey Knight · Answer

This helps a lot! Thanks

George P. · Answer

so many variables. can you get houses that are 50k with 1k in rent?

i think a better question would be "what cashflow are you getting". which, btw has been discussed on here quite a bit.

Andrew Syrios · Answer

It really varies by the property and by the financing you're using. We aim for 100/unit per month for multifamily and closer to $150/house. I should note that that is with 9% interest only financing on the houses. With apartments, it's usually a 75% LTV, 5.5% interest, 25 year loan.

What is your expected Cash Flow?

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