How Much can my property generate?

16 Replies

I live in Atlanta Georgia, and I want to be able to live out of the country for a year sometime in the future. I am interested in single family properties that bring in about 1400 a month. How many rental properties do you suggest I acquire so I can live out of the country comfortably for a year with consistent cashflow?

...As many as you can!

You might actually want to look at multifamilies as well. If you have the means to acquire a number of single families, you'll  get better economies of scale by putting the same number of units under fewer roofs. If you're overseas you're going to need 3rd party property management, which also works best with more units.

How much net cash flow are you going to need every month? 

Originally posted by @Taylor L. :

...As many as you can!

You might actually want to look at multifamilies as well. If you have the means to acquire a number of single families, you'll  get better economies of scale by putting the same number of units under fewer roofs. If you're overseas you're going to need 3rd party property management, which also works best with more units.

How much net cash flow are you going to need every month? 

 I would love to look at multifamilies. Most people tell me to start out with single families for my first property though. I would like to eventually net 3600 a month from the rentals. How doable is this in the Atlanta market?

@Clara Brashear the answer is "it depends." If you have millions to invest, then absolutely you can net $3,600 a month right away. If you don't, then it'll take a few years and a lot of hard work to get there.

@Clara Brashear

One of the very first things I did was create goals for myself. I figured out I needed 4k a month in cash flow to be able to do this full time or if something happened to my job I wouldn't have to hurry to get another job.

Then I made just a simple spreadsheet in excel with cash flow amounts. 250, 300, 400 etc. For each of those I made 2 scenarios. One with a house paid in full generating full cash flow and the rest of the houses just generating 250-400 cash flow. Then the 2nd one with no houses paid in full and all generating 250-400 cash flow per month.  What this allowed me to see was the bigger picture and help give me a driving force to reach my goals. If I only get 250 per month in cash flow I know that I would need 16 houses generating 250 per month to reach my goals. However if I get 400 per month in cash flow I only need 10. If one of the houses is paid off I can get there faster and only need 10 houses.

Hope this helps.

Also there is no harm in starting to look now. I am not familiar with your market, but if you go to the MLS you can browse what is currently available. You can plug those numbers in calculate your cash flow and see if it makes sense to buy it. Depending on how much you have to put down on a home it may or may not work for you. You could always buy a house and rent out a room for the time being too. Many options available to you.

My C class SRF generates $200 to $300 (net of vacancy/credit, turnover, repair and Cap Ex reserve whereas B class SRF generates less than $200, net. Also all are leveraged 80% with 20% forced with BRRRR, so almost no money stuck on them. So it depends on where you buy and how you buy them.

@Clara Brashear

It depends on your financial situation. Do you have money currently to put a down payment on a property?

If you need $3,600 to be comfortable, I would suggest you go the multi family route. I say this because I've never know a SFR to produce more that $200 per door, UNLESS is was bought all cash. Small multi family could be a good option for you.

To answer your second question, is it possible in Atlanta? For the average investor, my answer is no. This is because the market has been flooded with Wall Street money or out of state investors who are looking for markets to park their money. Average investors can’t compete with this type of competition. They can take lower returns on their investments than what the average Joe investor, which allows them to pay higher prices. I’ve seen houses sell for far more than they are worth.

My advice would be to look at the secondary markets in GA. Not as much competition in these markets, which means there are still deals to be had. Unfortunately, I feel the time of finding a good deal in Atlanta has passed. Just my opinion though.

Hope this helps.

Canesha

Originally posted by @Canesha Edwards :

@Clara Brashear

It depends on your financial situation. Do you have money currently to put a down payment on a property?

If you need $3,600 to be comfortable, I would suggest you go the multi family route. I say this because I've never know a SFR to produce more that $200 per door, UNLESS is was bought all cash. Small multi family could be a good option for you.

To answer your second question, is it possible in Atlanta? For the average investor, my answer is no. This is because the market has been flooded with Wall Street money or out of state investors who are looking for markets to park their money. Average investors can’t compete with this type of competition. They can take lower returns on their investments than what the average Joe investor, which allows them to pay higher prices. I’ve seen houses sell for far more than they are worth.

My advice would be to look at the secondary markets in GA. Not as much competition in these markets, which means there are still deals to be had. Unfortunately, I feel the time of finding a good deal in Atlanta has passed. Just my opinion though.

Hope this helps.

Canesha

Thank you! I think I should go for a multifamily, but is it ok to have a multifamily as my first property? Most people say single family is better to start. Also, when you say small multifamily do you mean a duplex or a large house with many rooms? Why is a multifamily more profitable?

@Clara Brashear

There’s a few people mentioned, you would get better cash flow through multi family properties. The more units you have and the less properties you own will give you a better margin on your return. I’m a huge believer of multiple units under one roof, the more the merrier.

@Clara Brashear   If you do go the multifamily route you could house hack.  Live in one unit and rent out the others which would allow you to save up some money for the next property.

Find out how much you qualify for and meet with a realtor in the area.  That should give you some good insight on what you can afford and where. I'm sure there's a few agents on bigger pockets here that could help you.

Originally posted by @Rick Baggenstoss :

One or two short term rentals would do it.  You can also set up more as you travel, live overseas. Although you'll be traveling, you'll be adding STRs to your portfolio.  You, of course, have to pick the right places.

Where are you going, @Clara Brashear?

I would like to live somewhere in Europe. I am trying to learn how to rehab houses and flip so I can make some cash to make down payments on rentals

 

@Clara Brashear , I would suggest you learn how to find and analyze deals first.  Rehabbing a house requires significant capital because you're paying a downpayment and contractors between draws.  

Let's say your rehab is $40k and you have three draws from your lender of $15k, $15k, and $10k.  Your lender won't pay for the first $15k until the work is complete and inspected (and sometimes until you've paid contractors).  Typically, you can't stop a week or so while you wait for the draw approval and for the check to clear, so you spend the next $10k on rehab so you might be out of pocket $25k by the time the check clears.

The down payment on a $150k purchase might be $10k - $15k.  See what I mean, it would help a lot to have $35k set aside to do a rehab project.   Doing 2 - 4 at a time is less of a problem since you can share funds across projects to some degree.  Also, a lot of people use their credit cards to pay for materials, etc. so you don't have to have this much in cash.

Find some great deals and you'll make $5k - $15k per contract you sell.  You need only a couple thousand to get started.  (Read up on driving for dollars and how to find owners).

@Clara Brashear

Hey Clara,

I mean 2-4 units when I say small multi family.

Yes, it’s perfectly fine to start with a multi family property. A lot of people do it, it’s called house hacking. You live in one side and rent out the other units. This gives you experience as a landlord, all while living tent free or close to it.

The good thing about 2-4 unit properties is that they are still considered single family properties technically, so they can be purchased with FHA loans. FHA loans are great for first time buyers because they have lower credit standards and lower down payment options. You have to live in the property for a year but that's a small ask for a long term investment.

Hope this helps.

Canesha

Depend on how good you can analysis your deals and connects you have that can save you money along the way. Also define living comfortably. Is 2,000 income comfortable? 20,000 monthly income comfortable?  May property net me about 350-800 per month. To bring in $1,400 in current market you probably need 5 property that's around $150,000 and each one generate $1,300 rent per month (Assuming you are using 25% debt) then you need to have $188K. In order to get this much loan you need to also prove your income is sufficient to pay your loan. So many factors go in. Good luck!! it's definably doable!