Negative cash flow and CoC ROI

11 Replies

Ive been using the calculator for about 3 days now and have looked at over 20 houses using the rental calculator and every house i do comes back waaay in the negative on cash flow and CoC ROI. I live in Houston Texas and have been looking at everything in the Northern suburbs of Houston. Anyone here in the same market area that can help me so i can figure out what I'm doing wrong?

@Jacob Turner I use the calculators quite a bit and get negatives in those areas at times as well. Keep working the numbers until they're where you want them to be and at that point you have what you need to offer. Many houses are priced above what most investors are willing to pay. There is the option to let the BP community look at your calculations, that may put you mind at ease. Good Luck! 

@Jacob Turner  Where are you finding the property leads from?  How are you filtering them into your analysis?

There are plenty of buy-and-hold investors in the north Houston suburbs generating cash flow and returns, but it can depend and where and what you are looking at.

Come out to a local meet up. There are dozens of them. Get to know some other buy & hold investors that are doing what you are planning to do. Right now networking is probably the only way to get a cost-effective deal here in this market - not even sure how to explain that in a way that makes sense.

@Axel Norvell man any number of them... I go to a few here and there but I try to just network with fellow BP members in my area.

You might try the Houston Buyers Club. There is another small one in Cypress that I liked. Will try to find those

@Jacob Turner it takes some very specific numbers to even break even and find a deal. That's why they're deals. Keep your head up though and keep playing with numbers until they work in your favor and you'll at least know what you can bid as a purchase price. Make sure your refinance loan is 70-80% of your arv. When I first started I kept getting -$900+ cash flows and couldn't figure it out. Hope this helps. Shoot me a message if you need any specifics.

I agree with everyone on here - keep looking! It is very common to find negative cash flowing properties with a negative CoCr if you aren't following some simple guidelines like the 1% rule. If you're analyzing a property that is worth $100k and not renting out for at least $1000 per month (1%), you can probably just move along. If you are using any type of leverage (debt) and not paying cash, you are not going to cash flow and your CoCr is going to be negative. Almost every time. It isn't a rock solid rule, but it certain helps you filter through properties quickly instead of burning many many minutes analyzing a property for a rental. When I see a home up North that has a $250k ARV but the market only rents for $1,700, if I'm looking at it as a rental I stop looking. Maybe it's a flip instead if the numbers are good. You can't be a one trick pony because you may be looking at a good flip through the eyes of a rental and pass on a good deal or vice versa.

@Mark Sewell hit the nail on the head! Him and I have had the pleasure of meeting in person. Go to local meetups. Message other investors in the market and see what they're up to. There are literally investor meetings somewhere in the city almost every day, so pick the ones close to you that you think will have a positive impact in your growth and get out there and network! 

@Mark Sewell . For sure! Come check it out one day if you get some free time - great place to hang out on the weekend. I'll shoot you a message on FB so we can chat more about starting a meetup and catch up.