Positive Cash flow investment properties

[Sarp Ka]

Hello all,

i have seen few threads here mentioning it's too hard to have cash flow positive properties.

i am looking at listings on Zillow and there are bunch of $100-150k 3 bedroom properties. According to zillow rent estimate they should rent out at 1-1.3k.

Some of them are already rented out. I am wondering if I missed something here with regarding to San Antonio not having cash flow positive properties. Is there something seriously wrong with those properties?

[Joseph Cacciapaglia]

@Sarp Ka probably. (All my comments below are for rent ready properties)

First, most of the online rent estimates are pretty far off here in San Antonio. I'm not really sure why, I see it pretty regularly with most of the more popular sites. You need actual rental comps from the same neighborhood as the home to be sure about a rental rate. 

Second, what you don't get from most of those sites is vacancy/turnover data. Most of the areas of town with strong rent to price ratios are also places where it's relatively more difficult to attract tenants and also where turnovers are more common. When you pull comps, be sure to check the DOM, because that's a good proxy for your vacancy rate. Rent ready homes in most of the areas that my clients actually want to invest here in town have rent to price ratios of about 0.7%. They're certainly lower cash flow in year one, but should provide better total returns in the long run.

Third, any home that is sitting on the market more than a few days probably has one or more major problems. Decent homes are selling extremely quickly today, and many are selling for more than the asking price.