What do you consider good cash flow?

Question

I'm looking at a property in a college down that is a 4BR home. Looks like I can get around 500 per bedroom so $2000/month.

The property is an REO asking 120k.  Waiting to hear back from my realtor on comps but it needs about 10k in repairs (windows, electrical, etc)

Putting into the analyzer, I am getting a positive cash flow of around 275/month being aggressive with my expenses.  My Cash-on-cash ROI is around 13%.

What do you think about this?  I'm trying to find somewhere that states what a good cashflow/ROI should be and results are all over the board from 5% up to 25%

Ceasar Blackman · Answer

When you say aggressive do you mean extra conservative ? College town sounds like solid rental pool going forward, but I'm guessing expenses could add up considering repairs after each turn over. With college students could that be multiple times a year. 275 sounds great but better to under promise and over deliver. Will you be managing yourself? What did you factor in for repairs and Capx ? Just some general questions that come to mind

Jeff B. · Answer

"Good cash flow" is subjective - - if you're happy with it, by definition it IS good.

Another way to ask this question is to calc the cash-on-cash value

•  (ie NOI/down payment).

This is the ROI on your real money invested and can be compared to any other return in the market place at this time.

Chris Seveney · Answer

completely dependent on your own preferences.    Many will say $100 per door but it's what your criteria is.

Parker Detweiler · Answer

I only do college rentals, however I do not finance. I look for a 6-7 year gross return of my initial investment, so is I am in the property up front total investment of 100K then I need to get around 1200 a month and I will not pay for anything other then yard/pool care. It normally puts all of my cash back into my pocket in a 10 year span after all expenses and what not, however I am yet to carry a single family rental for even 5 years.

Kyle Soderman · Answer

@Tim Dastis I am also interested in students housing. (looking at 4br SFR as well)

I have seen many people saying they want 12% return with at least $150 in cash flow per unit. (that is not per door)

What I am am looking for right now is a 12% return with at least $200 a month cash flow.

Tony Velez · Answer

That's a good question. I'm looking to buy my first property but my thoughts keep going back to what if taxes go up? What is the cost of your new insurance?

What do you consider good cash flow?

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