Houston, TX · Member since 2010 · 150 posts · 159 votes
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?
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.
Rental Property Investor · Huffman, TX · Member since 2018 · 68 posts · 18 votes
6y
I'm at averaging ~ $135/door, 75% LTV, 30 yr fixed, AFTER accounting for pro forma expenses (repair/capex, management, turnover, vacancy) on a property in Channelview and another in Atascocita. As has been mentioned, the cash flow isn't really the exciting part about real estate, the effect on the balance sheet is.
Real Estate Broker/Owner & Property Manager · Sugar Land, TX · Member since 2013 · 660 posts · 459 votes
6y
@Juan Pardo You just to plan for it. I had 2 properties actually vacant since April until last month and I still have to make the mtg payment for both. It has to come from your previous cashflow savings which might keep it seperate for vacancy or all together. It's like any business, you have to plan for the slow times and bad time.
@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.
Thanks for the response Travis.
While the financing sounds great, if you're only making $200/mo after PITI then your property is losing money every month. There is ~$200/mo in Capex alone, not to mention vacancy, lease fees, etc.
@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.
Thanks for the response Travis.
While the financing sounds great, if you're only making $200/mo after PITI then your property is losing money every month. There is ~$200/mo in Capex alone, not to mention vacancy, lease fees, etc.
@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.
Chris,
Can you point me to the wholesalers you're talking about? I know several wholesalers in the area and none of them come close to that much equity with that much cash flow.
Investor · San Antonio, TX · Member since 2016 · 145 posts · 61 votes
6y
$200 a month when I self manage is $2400/year cash flow before unforeseen expenses plus I can buy 4 -5 of these properties with 5% down than I otherwise would have conventionally with a typically 15-25% equity stake up front based on market prices due to the fact these are foreclosures. These deals have been very lucrative for me over the years and I keep aquiring more and more assets through this process. The cash flow isn't super, but it is positive and I've done quite well through this program.
Real Estate Agent · Oklahoma City, OK · Member since 2019 · 956 posts · 600 votes
6y
@Wade G. In OKC on 60-80k homes after PITI, 3%-10% for ongoing maintenance (not budgeting for capex), 5% vacancy, 10% for property management you're typically looking at ~$170/month cash flow. I know you asked for Houston but thought you may have an interest in a surrounding state!
They 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.
I see those as two different strategies. e.g. I have a rental in Southern California that cash flows about $30/month after expenses, but I expect to net over $100K in the five years I will own it, between appreciation and principal paydown. Yearly, I realize just under a 20% COC return due mostly to pp and the fact that I have very little cash tied up in the property. I also just purchased a rental in Lufkin, Texas that cash flows $700/month (11.8% ROI) but I expect it to someday sell at about the same price, even if I held it for 10 years. Personally, and for my investment goals, I prefer the cash flow strategy.
Rental Property Investor · Orlando, FL · Member since 2015 · 353 posts · 269 votes
6y
We have several investments in Central Florida (Brevard County) and North Florida (Jacksonville) that cash flow anywhere between $150 and $450 each. Most of our properties are in the upper range and our $150 door could be raised to around $400 but I have been keeping the rent low bc those tenants are my ideal.
My cash flow calculation is after PITI and after 50% to 60% of remaining margin set aside for capex, repairs, vacancy, misc expenses etc.