Curious What Everyone's Cash Flow Is
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Investor · Cypress, TX · Member since 2015 · 143 posts · 144 votes
6y@Wade G. For one, you're looking at the higher end of the rental market with the 190K ARV's. Most of the $500+ CF can easily be obtained with properties in the 125K ARV range. Buying properties for 50-75K, putting another 20-30K into them and renting for $1200-1400. Easily found in Texas City, Dickinson, Baytown, Sunnyside, etc. Now I do own several 200K ARV rentals, but I strictly do Sec 8 and mine CF $350-400. Personally I don't like the lower end stuff. I think the lower priced stuff will have better CF but less appreciation. You would have to run numbers to see what works best for you. Also have to take into consideration what you're doing for repairs/maintenance. Mine is setup different than probably most investors, but it works for me.
The typical 200K house around Houston area will appreciate 4-6% (quite a bit higher in some areas), whereas lower end properties in less desirable (but still good markets) maybe 2-3%. To me, the better home with better appreciation is worth a little less CF - just have to buy more! Some investors are strictly CF and don't really care about appreciation. I also look at it from a refinancing standpoint, and some of the lower end stuff won't qualify as a lot of lenders have a 75-90K min loan amount.
36 Replies
- Specialist · OverTheRainbow · Member since 2020 · 607 posts · 909 votes6y
Originally posted by @Wade G.:
My average CF on a 3/2/2 SFH in southeast Harris County worth about 160k - 190k, at 75% LTV, is about $300 month. That $300 month is after PITI only, actual CF after repairs, maintenance, PITI, and vacancies is about $100 month. So for me that's about $100 a month per house that I could spend on personal living expenses if I wanted to. I have been a member of LU off and on for many years but I have never experienced the $500 - $700 per month of spendable CF that they proclaim on a newly purchased properties at 75% LTV. I ask because I am refinancing a couple of my properties and I'm trying to figure out where to invest the proceeds. Buying more houses with $100 month CF does not excite me too much. Buying properties with $500 - $700 month real actual CF would excite me. So I'm asking other Houston area investors what your typical CF is?
Best I can do for you is verify what my Turnkey Provider in Phoenix AZ says. I get the same thing he discusses in this post and I can't get that in CA. He doesn't contact me unless I can get at least what he discusses here: (He was kicked off BP because he got too detailed, apparently you can't do that on BP) His posts are the ones that say ACCOUNT CLOSED. But, he sent me the checks and the HUD closing statements when I asked. He's for real.
Average Cash Flow Per Door In Phoenix Metro Area - 6yMark S.Pro MemberRental Property Investor · KY · Member since 2013 · 1k+ posts · 537 votes
Hey @Wade G., I'm probably at an average of $300/house after PITI and PM fees (with 20% down, 30-year fixed) in Memphis. I use 18% of gross rents as reserves (8% vacancy, 5% maintenance, 5% capex). These are turnkey properties. So, after PITI, PM fees, 18% gross rents reserves, I'm probably around $150/door on average. Worst one is about $100/month and best is about $250/month. I'm completely hands-off.
It’s also important to look at total return: cash flow + tax benefit of depreciation + equity growth via principal paydown, potential appreciation (which I assume for me is 0% to be conservative) + inflation hedging benefit via leverage with long-term fixed interest rate debt. When you look at it this way, it’s hard to beat for something passive. There are people on here that hate on turnkey and earn higher returns. That’s great. I don’t want a second job and turnkey suits me just fine so far.
Hope this helps.
- Investor · Cypress, TX · Member since 2015 · 143 posts · 144 votes6y
@Wade G. For one, you're looking at the higher end of the rental market with the 190K ARV's. Most of the $500+ CF can easily be obtained with properties in the 125K ARV range. Buying properties for 50-75K, putting another 20-30K into them and renting for $1200-1400. Easily found in Texas City, Dickinson, Baytown, Sunnyside, etc. Now I do own several 200K ARV rentals, but I strictly do Sec 8 and mine CF $350-400. Personally I don't like the lower end stuff. I think the lower priced stuff will have better CF but less appreciation. You would have to run numbers to see what works best for you. Also have to take into consideration what you're doing for repairs/maintenance. Mine is setup different than probably most investors, but it works for me.
The typical 200K house around Houston area will appreciate 4-6% (quite a bit higher in some areas), whereas lower end properties in less desirable (but still good markets) maybe 2-3%. To me, the better home with better appreciation is worth a little less CF - just have to buy more! Some investors are strictly CF and don't really care about appreciation. I also look at it from a refinancing standpoint, and some of the lower end stuff won't qualify as a lot of lenders have a 75-90K min loan amount.
- 6yJames PolkPro MemberRental Property Investor · Houston, TX · Member since 2018 · 48 posts · 30 votes
Hi Wade,
I am an active investor in Houston. I still have 3 rentals. I'll give the rental example for this year. A flip that didn't happen.
bought a 3/ 1 house for 59 k. Put 55k into it, plus 10k fees/ holding and made it a 4/2. Property is worth 145k and will appreciate.
Rented for $1400, cash flow after piti is $559 but as you say after maintenance and vacancy real cashflow is about $300. But $3600 on $20,000 is 18% cash on cash return. The appreciation and principal payments will bring it to the low 20's. Still a good return.
- Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes6y
@Chris Hopper I love your posts, man. Really useful, especially for us local folks.
Great point on the refi challenges for the lower end stuff. It's true - I'm trying to get one done for a client right now, and we are just short of the $75k min.
- 6yCameron TopePro MemberProperty Manager · Katy, TX · Member since 2015 · 1k+ posts · 1k+ votes
Wade,
I agree with @Chris Hopper that the lower end properties are hard to finance but to say "Most of the $500+ CF can easily be obtained with properties in the 125K ARV range" is flat out not true, unless you bring a significant down payment but then your return is very low.
High taxes and insurance eat up a lot of your cashflow in Houston. We're seeing owners (including my rentals) cashflowing in the range of $0 - $500/mo. However, some of these properties we're purchased several years ago and have had the benefits of appreciation.
Real estate is a long game and you really don't make much money in the beginning - especially with rentals. Unless you market to off-market properties (for BRRRR deals) then the odds are you'll experience very little cash flow in the beginning.
Good news is it's not all about cash flow! Cash flow is your cushion so you can keep buying more properties. The real money is made where Chris mentioned, in the appreciation. There's also the tax advantages and debt pay down.
It's the combination of cashflow, appreciation, tax benefits, and debt paydown that make real estate lucrative.
- Investor · Cypress, TX · Member since 2015 · 143 posts · 144 votes6y
@Cameron Tope I'll stick by my statement. If you're buying properties in the $40-70k range and all in around $90-110k they will absolutely cash flow all day long. And yes theres plenty of those out there. Most of those properties (depending on area) will rent in the 1200-1400 range (higher for Sec 8). So with very little to no money out of pocket it is cash flowing and a great COC return.
Now how long, who knows. Yes the appreciation and taxes will catch up, but that’s a good problem to have.
- Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes6yThey range between negative $800 per month (Short term loan and high appreciation) to positive $1900/mo (been held for 10 years as rents increased) Being positive or negative $200/mo should make no difference in your investing. Otherwise one bad ac unit, or a 2 month vacancy will change your whole year from positive to negative. Loan paydown and appreciation will make you rich, cashflow just helps you hold on until that happens.
- 6yJames PolkPro MemberRental Property Investor · Houston, TX · Member since 2018 · 48 posts · 30 votes
What Chris said....multifamily is what is designed for cashflow. The business is valued by it's cashflow.
- 6yHolly BrownBusiness MemberReal Estate Agent · Houston, TX · Member since 2019 · 190 posts · 137 votes
I have had more success with getting to those upper 700/month ranges on average with STR (without having to BRRRR). The only caution is most STR's have an off-season, thus I may have a 1200/month cash flow and then a 300/month cash flow all in the same year. You just have to plan for it.
I personally would not buy or suggest to buy a property with only 100/month cash flow after reserves as yearly increased tax assessments could quickly wipe that cash flow out here in Houston.
- Member since 2019 · 13 posts · 17 votes6y
@Holly Kaufman hey Holly, do you stay more in your reserves per month for repairs and maintenance. How much are you turning over tenants? What’s the clean up cost like for you when a tenant moves?
- 6yHolly BrownBusiness MemberReal Estate Agent · Houston, TX · Member since 2019 · 190 posts · 137 votes
I definitely save part of my cash flow as reserves for repairs and maintenance. Depends on the property as to how much. I also have 2 months worth of PITI in reserves per property.
For STR, it depends on the property. Smaller condos go for $80-90 per clean and turnover while a 2+ bedroom will be higher ($150s). For our LTR's we do the initial turnover ourselves, that way we know if any of the deposit is needed for repairs, safety checks, etc. and then have our cleaners do a deep clean before the next tenant moves in.
Hope that helps!
- Summerville, SC · Member since 2018 · 553 posts · 252 votes6y
My average CF, after all expenses (we'll just call it "take home pay") is $350-475/mo.
Be advised, my portfolio is made up of a wide variety of types of rentals. From SFRs to MHs. A paid off MH will fetch the upper range there.
I'll also say, as I've gotten more experience, my CF threshold has increased. I wont touch anything unless my "take home money" is at least $300/mo
- 6yKenneth GarrettPro MemberInvestor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
I usually cash flow $300-$400 on my SFR. The other units are a minimum of $250 a door. I typically invest in BRRRR projects. One of the advantages with these projects is they are rehabbed so your repair cost and capex is low. I can buy projects/foreclosures directly from small local banks at a great discount and there is no competition. They definitely need work so the BRRRR is a great strategy.
- Rental Property Investor · Kitsap county Washington · Member since 2017 · 117 posts · 39 votes6y
My properties average $900+/door after piti. 12 doors mostly duplexes. I guess I'm not as highly leveraged.
- Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes6y
Check out 3 and 4 unit properties these are what you can realistically net $500+ at 75 LTV in B class areas. Most of the cashflow numbers you see online are BS and people aren't properly accounting for all the long term averaged out expenses.
- 6yCameron TopePro MemberProperty Manager · Katy, TX · Member since 2015 · 1k+ posts · 1k+ votes
Originally posted by @Chris Hopper:
@Cameron Tope I'll stick by my statement. If you're buying properties in the $40-70k range and all in around $90-110k they will absolutely cash flow all day long. And yes theres plenty of those out there. Most of those properties (depending on area) will rent in the 1200-1400 range (higher for Sec 8). So with very little to no money out of pocket it is cash flowing and a great COC return.
Now how long, who knows. Yes the appreciation and taxes will catch up, but that’s a good problem to have.
Chris,
If there are plenty of those properties out there then please send all of them to me. I'll buy every single one of them and pay you a solid wholesale fee.
It would also be helpful for me and the other investors if you could share how you're finding all these properties.
- Investor · San Antonio, TX · Member since 2016 · 145 posts · 61 votes6y
@Cameron Tope I have been doing $200/month after PITI with 95% LTV here in San Antonio (VA Vendee finance program on VA foreclosures). My 30 year notes bave been at 3.75% in last year. SFH 2200 4BR/BA typically. Would be around $300-400 if I did conventional or close to it.
- Realtor · California, CA · Member since 2020 · 3 posts · 1 vote6y
It depends on the property, location and average rent pricing in the area. I have a condo (2/1.5) in Sacramento that gives me $450 on average (depending on the utilities) and a house in Yuma (3/2) that gives me $260
- Real Estate Broker/Owner & Property Manager · Sugar Land, TX · Member since 2013 · 660 posts · 459 votes6y
@Wade G. Cashflow is always been sticky topic and important one. I see some hot discussion between Chris and Cameron but both have their points. What you quoted around $300 is about average CF before Capex and Repairs in SFH for rents around $1350-1500 and properties around $150-180 ARV. Because we live in Texas, our property taxes eat up most of our cash flow.
In my case, 6 of 7 properties have $300-$400 CF except one because I have 15 year mortgage one. If you take out Capex and repairs 5%, you will be around $100-$150 at end. This is trend in any B class neighbor which you buy in that range. If you go in C class neighborhood and invest low and get high rent, your cashflow might more. But appreciation would be nothing. If you go A class, rental won't work at all. Its all about appreciation. I like to stay in B Class neighborhood.
I don't how @Chris Hopper finds his properties so low in B class neighbors with 120k ARV. I never seen them anywhere.It might be usually borderline B & C possibly. Also I do not believe in Appreciation which is just icing on the cake. If the market is ggood, you reap the reward when you sell it if not appreciation is all up in air.
You have to go back basics. Buy and Hold is long term investment and it's meant to make you passive income when you paid off after retirement. When you retire whether its 55 or 65, when you paid off your properties, no mortgage, thats when you make the full benefit of the rentals.
- Investor · Cypress, TX · Member since 2015 · 143 posts · 144 votes6y
@Cameron Tope find them by marketing. As stated, I don’t usually do those types of properties anymore and don’t market to them. But I do see them a lot from wholesalers.
@Vijaianand Thirunageswaram we’re usually on the same page with stuff, but I have to disagree with you on the appreciation. It’s not a bonus, it’s very important. You can get rich off rents, but you’ll get wealthy off appreciation. That’s the main reason for real estate, not the CF.
- 6yWade G.Houston, TX · Member since 2010 · 150 posts · 159 votesOP
What you describe in B class neighborhoods is what I have experienced. I had a property in a C neighborhood but didn't like it much. Appreciation was low, got a phone call early one morning because someone kicked the door in and robbed the house. I tend to like the B neighborhoods, much better appreciation, working class families, not as good cashflow. Taxes have been a killer the last few years. In hind sight though I wish I would have just hired a PM and kept the C class house. Oh well, mistake number 5,000 in my investing years.
I agree about appreciation. Without appreciation I don't think I would be buying and holding houses at all.
I agree about MF being designed for cashflow.
- Member since 2020 · 201 posts · 118 votes6y
Originally posted by @Vijaianand Thirunageswaram:
@Wade G. Cashflow is always been sticky topic and important one. I see some hot discussion between Chris and Cameron but both have their points. What you quoted around $300 is about average CF before Capex and Repairs in SFH for rents around $1350-1500 and properties around $150-180 ARV. Because we live in Texas, our property taxes eat up most of our cash flow.
In my case, 6 of 7 properties have $300-$400 CF except one because I have 15 year mortgage one. If you take out Capex and repairs 5%, you will be around $100-$150 at end. This is trend in any B class neighbor which you buy in that range. If you go in C class neighborhood and invest low and get high rent, your cashflow might more. But appreciation would be nothing. If you go A class, rental won't work at all. Its all about appreciation. I like to stay in B Class neighborhood.
I don't how @Chris Hopper finds his properties so low in B class neighbors with 120k ARV. I never seen them anywhere.It might be usually borderline B & C possibly. Also I do not believe in Appreciation which is just icing on the cake. If the market is ggood, you reap the reward when you sell it if not appreciation is all up in air.
You have to go back basics. Buy and Hold is long term investment and it's meant to make you passive income when you paid off after retirement. When you retire whether its 55 or 65, when you paid off your properties, no mortgage, thats when you make the full benefit of the rentals.
"In my case, 6 of 7 properties have $300-$400 CF except one because I have 15 year mortgage one. If you take out Capex and repairs 5%, you will be around $100-$150 at end. This is trend in any B class neighbor which you buy in that range. If you go in C class neighborhood and invest low and get high rent, your cashflow might more. But appreciation would be nothing. If you go A class, rental won't work at all. Its all about appreciation. I like to stay in B Class neighborhood.
Do you mean the properties only yield 150 USD per month net of debt and taxes? Is this an average figure for 6 properties with a 30-year mortgage and 1 property with a 15 year mortgage?
Is it not easier to buy stocks or futures over an index like NASDAQ?
- Real Estate Broker/Owner & Property Manager · Sugar Land, TX · Member since 2013 · 660 posts · 459 votes6y
@Chris Hopper We are still on the same page my friend!! I am not disagreeing that Appreciation will make you wealthy but what I am trying to say it's not CONSTANT or GIVEN. Don't get me wrong, I bought a property in B Class during 2008 recession for 48k and sold for 95k in 2016 to pay off my debt. Which is also 100% appreciation? It depends on many parameter, whether the economy is good, market condition etc., Even it appreciates 2-3% every year and when it's time to sell and market condition is not in your favor, whatever you gains cannot be realized. Same as stock market current situation. Also appreciation is not going to be keep going up. It's cycle as you know, it's going to continue to go up and during down turn it will correct itself and and start another up trend after that. So it's all up to your situation where you are during the cycle when you plan to realize appreciation. You know it...
I strongly believe and share to my investor mentees, ABCDE(Appreciation, Build up Equity, Cashflow, Depreciation & Equity Building) of Real Estate Investing has to work together so you can use them depending on your situation and economical conditions.@Wade G. I would regret about investing in B Class at all. Getting $100-$150 cashflow is not bad thing after all expenses and capex and repairs which also depends on your cash down. If you only had $10k on the deal, your $1200/year is 12% return whereas $30k down would only be 4% return COC. It all matters. Try to reduce your down and your cashflow will make sense. I wouldn't risk C class unless its really attractive.
@Juan Pardo I mentioned $100-$150 after all debts and savings like CapEx and Repairs 5% each which is still great compared to 2% bank or stock market with so much deflections. Don't you think?
- Member since 2020 · 201 posts · 118 votes6y
Originally posted by @Vijaianand Thirunageswaram:
@Chris Hopper We are still on the same page my friend!! I am not disagreeing that Appreciation will make you wealthy but what I am trying to say it's not CONSTANT or GIVEN. Don't get me wrong, I bought a property in B Class during 2008 recession for 48k and sold for 95k in 2016 to pay off my debt. Which is also 100% appreciation? It depends on many parameter, whether the economy is good, market condition etc., Even it appreciates 2-3% every year and when it's time to sell and market condition is not in your favor, whatever you gains cannot be realized. Same as stock market current situation. Also appreciation is not going to be keep going up. It's cycle as you know, it's going to continue to go up and during down turn it will correct itself and and start another up trend after that. So it's all up to your situation where you are during the cycle when you plan to realize appreciation. You know it...
I strongly believe and share to my investor mentees, ABCDE(Appreciation, Build up Equity, Cashflow, Depreciation & Equity Building) of Real Estate Investing has to work together so you can use them depending on your situation and economical conditions.@Wade G. I would regret about investing in B Class at all. Getting $100-$150 cashflow is not bad thing after all expenses and capex and repairs which also depends on your cash down. If you only had $10k on the deal, your $1200/year is 12% return whereas $30k down would only be 4% return COC. It all matters. Try to reduce your down and your cashflow will make sense. I wouldn't risk C class unless its really attractive.
@Juan Pardo I mentioned $100-$150 after all debts and savings like CapEx and Repairs 5% each which is still great compared to 2% bank or stock market with so much deflections. Don't you think?
It's money coming in, so pretty good, but you have to use debt on all properties; how do you protect yourself in case, for instance, 2 tenants dont pay rent, or several properties are vacant?
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