How much should you typically aim to Cashflow per property? Why?

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Jacob Sampson
Investor · Topeka, KS · Member since 2015 · 1k+ posts · 1k+ votes
6y

I think there are always other variables that come into play when discussing cash flow.  For example, I look for at least $100/door but on a 15 year note and in a C+ or better neighborhood.

Further, everyone calculates cash flow differently. I calculate cash flow as gross rent - 30%(vacancy, maint, and capex) - PITI = true long term cash flow.

As an example $1000 (rent) - $300 (vac, maint, and capex) - $600 (principal, interest, taxes, and insurance) = true long term cash flow.  And remember the principal and interest is based on a 15 year note.

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  • Jacob Sampson
    Investor · Topeka, KS · Member since 2015 · 1k+ posts · 1k+ votes
    6y

    I think there are always other variables that come into play when discussing cash flow.  For example, I look for at least $100/door but on a 15 year note and in a C+ or better neighborhood.

    Further, everyone calculates cash flow differently. I calculate cash flow as gross rent - 30%(vacancy, maint, and capex) - PITI = true long term cash flow.

    As an example $1000 (rent) - $300 (vac, maint, and capex) - $600 (principal, interest, taxes, and insurance) = true long term cash flow.  And remember the principal and interest is based on a 15 year note.

    25Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    6y

    It very much depends on how much money you have into the house and the market.  $100 per month on a $50K house is very different than a $300K house, not to mention the type of tenants you get.  I'd rather have lower cash flow and better tenants.

    19Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    6y

    Easy question. $?????...it depends on what my REI Plan tells me I need at that time.

    3Reply
  • Stephen J DavisBusiness Member
    Rental Property Investor · Houston, TX · Member since 2017 · 529 posts · 467 votes
    6y

    I am getting between $300 and $400 per house. I completely rehab the house when I buy it so my Capex is little to nothing. I generally sell and 1031 it into more houses in year 5 or 7 before there is a need for a major rehab. These are $150,000 to $220,000 homes in the greater Houston area. My formula is (PITI + $300 (vacancy and maintenance)) - Rent (average $1550)

    23Reply
  • Jacob Sampson
    Investor · Topeka, KS · Member since 2015 · 1k+ posts · 1k+ votes
    6y
    Originally posted by @Theresa Harris:

    It very much depends on how much money you have into the house and the market.  $100 per month on a $50K house is very different than a $300K house, not to mention the type of tenants you get.  I'd rather have lower cash flow and better tenants.

     Great point.  It just shows that a question as simple as "what cash flow you aim for?" is not quite as simple as you think.

    5Reply
  • Dontrea Riser
    OP
    Rental Property Investor · Member since 2019 · 15 posts · 8 votes
    6y
    Originally posted by @Stephen J Davis:

    I am getting between $300 and $400 per house. I completely rehab the house when I buy it so my Capex is little to nothing. I generally sell and 1031 it into more houses in year 5 or 7 before there is a need for a major rehab. These are $150,000 to $220,000 homes in the greater Houston area. My formula is (PITI + $300 (vacancy and maintenance)) - Rent (average $1550)

    Nice! That sounds like a good strategy. When you decide to sell the properties in year 5-7 do they appreciate much in value generally?

    2Reply
  • Dontrea Riser
    OP
    Rental Property Investor · Member since 2019 · 15 posts · 8 votes
    6y
    Originally posted by @Jacob Sampson:
    Originally posted by @Theresa Harris:

    It very much depends on how much money you have into the house and the market.  $100 per month on a $50K house is very different than a $300K house, not to mention the type of tenants you get.  I'd rather have lower cash flow and better tenants.

     Great point.  It just shows that a question as simple as "what cash flow you aim for?" is not quite as simple as you think.

    Very true. I knew it would not be a "simple" question, I wanted to hear different perspectives and opinions of others in different markets to see if I could find some similarities in the responses.

    1Reply
  • Calvin OzanickBusiness Member
    Property Manager · Janesville, WI · Member since 2017 · 707 posts · 297 votes
    6y

    I think $100/house is something that gives you plenty of room to work with. Keep in mind that cashflow is not the only wealth building tool of real estate. You could own a house for 10 years and not cash flow a single dollar, but in 10 years you could make tens of thousands of dollars. Just knowing your abilities through different avenues of wealth generation. 

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  • Andrew B.
    Rockaway, NJ · Member since 2016 · 2k+ posts · 2k+ votes
    6y
    This will vary by market and investment goal. For example, Ohio investors may be looking for $400 per door, while CA investors may have negative cash flow due to higher purchase prices.
    7Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    6y
    Originally posted by @Dontrea Riser:
    Originally posted by @Stephen J Davis:

    I am getting between $300 and $400 per house. I completely rehab the house when I buy it so my Capex is little to nothing. I generally sell and 1031 it into more houses in year 5 or 7 before there is a need for a major rehab. These are $150,000 to $220,000 homes in the greater Houston area. My formula is (PITI + $300 (vacancy and maintenance)) - Rent (average $1550)

    Nice! That sounds like a good strategy. When you decide to sell the properties in year 5-7 do they appreciate much in value generally?

     If they didn't, there wouldn't be anything to 1031. The only real point of that strategy is to defer capital gains taxes. 

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  • Bryce Deeney
    Member since 2020 · 40 posts · 31 votes
    6y

    Depends on the local market as well. I look at investment properties in Phoenix and Eastern Washington. Phoenix generally won't provide a huge cash on cash ROI, but the appreciation (and future expected) are massive; so I'll take a thinner upfront return for long term gains. In Eastern WA, the market is more stable (lower highs, higher lows in appreciation), so knowing I likely won't get more than my money back on [Appreciation - Inflation], I need higher $/door to justify the investment.

    3Reply
  • Corey Hawkinson
    Rental Property Investor · Bloomington, MN · Member since 2019 · 404 posts · 542 votes
    6y

    @Dontrea Riser I look for at least $200 per door. Difficult to achieve right now in my market but not impossible. I achieved well above that on my last 4 unit purchase, but that will take 2 years to stabilize based on the prior owner letting things go.

    As everyone mentioned, that is only one variable to consider.

    2Reply
  • Nicholas Mann
    Valhalla, NY · Member since 2013 · 132 posts · 84 votes
    6y

    @Dontrea Riser

    Hey as other people mentioned here cashflow does depend on your market and what you want to make on your investment. I am currently looking to buy a multifamily property in my expensive market and the cashflow I'm seeing can be in the $400-$600 range. That being said the Cash On Cash ROI is pretty low due to the high downpayment I have to use. I believe it was in Brandon Turners book on rental property investing where he said he looks for at least $100 a month in cash flow and a 10-15% Cash on Cash ROI. Hope that helps

    3Reply
  • Juan Erick Rico Avalos
    New to Real Estate · Lincoln, NE · Member since 2019 · 25 posts · 23 votes
    6y

    I would say it's all about how much skin you got in the deal. If I invest 100k it wouldn't make sense to only make $100 in monthly cash flow. Let's say I only invest 10k and get $ 100 a month that's way better because i'm getting a 10% cash on cash return on my money.

    8Reply
  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    6y

    How much you cash flow is all about how much money you put down.  the more money you put down the more goes to you and not a mortgage. 

    But, in general you should be earning apprx 6% on your money - thinking multi family here - and this is just an average - it may be more or less!

    3Reply
  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    6y

    I’m cool with $100/door if I really like the house or location off a 15 year loan. Or if I really like the tenant then I’m good with low cash flow. As long as these things all get paid off by my tenants in 15 years then I’m good.

    4Reply
  • Dontrea Riser
    OP
    Rental Property Investor · Member since 2019 · 15 posts · 8 votes
    6y
    Originally posted by @John Morgan:

    I’m cool with $100/door if I really like the house or location off a 15 year loan. Or if I really like the tenant then I’m good with low cash flow. As long as these things all get paid off by my tenants in 15 years then I’m good.

     Nice! Thank you for your feedback.

    0Reply
  • Dontrea Riser
    OP
    Rental Property Investor · Member since 2019 · 15 posts · 8 votes
    6y
    Originally posted by @Mary M.:

    How much you cash flow is all about how much money you put down.  the more money you put down the more goes to you and not a mortgage. 

    But, in general you should be earning apprx 6% on your money - thinking multi family here - and this is just an average - it may be more or less!

    Nice! Thank you for your feedback. Yeah I like multi families a lot more than single family investments to start out.

    1Reply
  • Neetu Nagi
    Real Estate Agent · Member since 2019 · 23 posts · 8 votes
    6y

    @Stephen J Davis I’m in ca and doesn’t own any property yet. How much down u think I need?

    0Reply
  • Fred Cannon
    Rental Property Investor · St Augustine, FL · Member since 2019 · 264 posts · 279 votes
    6y

    @Dontrea Riser. In my deals I look for ROI of 10% or greater. I generally buy turnkey properties that I hope wont have a lot of capX I like putting 30% down as a general rule and want to cash flow 10% off of the down payment After 5 years I list FSBO and keep on rolling with a 1031. I add one additional property every year or two and only have one listed for sale at a time. At this moment I have 8 properties that I self manage This has been a 10 year journey so far. I still work a full time job so this started out as a long term strategy and more or less a hobby. Now it is becoming a very good retirement plan and a monster at the same time. I have to keep feeding the beast (time and money) to keep it alive.

    9Reply
  • Matthew McNeil
    Rental Property Investor · Boise/Portland · Member since 2017 · 709 posts · 742 votes
    6y

    I think you’ll find that $100/door is the baseline goal. I’m earning between $600-$800/door. Larger down payments though. High appreciating west coast market. 

    4Reply
  • Cory LucasPro Member
    Rental Property Investor · Brighton, IL · Member since 2019 · 431 posts · 139 votes
    6y

    @Jacob Sampson thanks for all the insight and numbers

    1Reply
  • Matt BurrPro Member
    Real Estate Investor · Chelsea, MI · Member since 2017 · 56 posts · 13 votes
    6y

    To piggy back on this post a bit. I am looking at a few properties in a small market. Property prices are pretty low. I have always told myself the $100 a door rule but I am finding properties now that are not quite at the $100 mark but my Cash on Cash on Cash return is north of 18%. 

    I have been investing for real estate for several years and I cant think of a reason why this wouldn't work. In other words 18% is 18% no matter if I make 5$ a door or 500$ a door assuming I have my expenses figured accurately which I always make very conservative. 


    Anyone have any thoughts on if my logic is sound or not?

    1Reply
  • Kunal Mishra
    Flipper/Rehabber · Jersey City, NJ · Member since 2016 · 158 posts · 86 votes
    6y

    @Dontrea Riser

    In continuation of some points that other RE investors have made .

    Cash flow per door needs to be looked upon along with Cash on Cash return.

    $100 per door with a CoC above 15/16% in Amy market is awesome. Yes you can find deals with above 20% in return but they come at higher risks or a one time deal that lands in front of you and you are ready to grab.

    Anything below 15% should come at some appreciation in few years.

    I second @Matt Burr $5 or $500 the 18% is 18%

    So we need to look at how much work your money is doing for you.

    Thanks

    Kunal M.

    5Reply
  • Amber Koontz
    Houston, TX · Member since 2015 · 204 posts · 68 votes
    6y

    I'm currently considering a property at 16.70% CoC / Cashflow $38.27. All of my criteria is met and there is opportunity to raise the rent a bit.

    1Reply
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