How to find homes with cash flow.

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How to find homes with cash flow.

Sai Medavarapu
Member since 2020 · 5 posts · 3 votes

Hello all,

I would like to know on how to research the cities in which there could be a cash flow on property after 20% down. 
OR are there any cities that you guys have in mind that have returns as such. Currently, in Phoenix market. I barely see a decent property returning 100$ cashflow after 20% down. It was way different a year half ago.


Please suggest a few cities. 


Thank you.

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Bob E.
Queen Creek, AZ · Member since 2014 · 2k+ posts · 1k+ votes
4y

@Sai Medavarapu  I would suggest waiting 6 months.  Supply is ramping up just as demand is dropping off.  I think if you are patient you will be rewarded.  Be prepared for higher financing rates and lower prices but don't sweat the rates, You can always refinance latter when rates drop.  

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    4y

    @Sai Medavarapu

    Just look at any city with high crime or a city with a D neighborhood

    It will cash flow on paper.

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  • Sai Medavarapu
    OP
    Member since 2020 · 5 posts · 3 votes
    4y

    @Chris Seveney - Thank you for responding - Is there any website that provides us that data showing which is a D neighborhood?

    Thank you.

    0Reply
  • Conner Olsen
    Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes
    4y

    @Sai Medavarapu Phoenix will cash flow if you have a unique rental strategy. In Austin (which seems like a very similar market recently) I'm renting my property as a medium-term rental and making great cash flow. You can get a 400k house, rent  it for $3,500-$3,800/month and net $200-$400/month.

    1Reply
  • Sai Medavarapu
    OP
    Member since 2020 · 5 posts · 3 votes
    4y

    @Conner Olsen -  Thanks Conner - Do you happen to know some good places(zip codes) in and around Austin to keep an eye out?

    0Reply
  • Simon Ashbaugh
    Realtor · Columbus Ohio, Cleveland Ohio · Member since 2022 · 849 posts · 830 votes
    4y

    Columbus Ohio still has a lot of opportunities to cash flow, same with Cleveland Ohio. and crime rates are relatively low even in D neighborhoods.

    5Reply
  • Andres Murillo
    Real Estate Agent · Los Angeles, CA · Member since 2022 · 137 posts · 106 votes
    4y

    Atlanta still has some cash flow opportunities, especially with unique strategies. In contract now on a $454k home with 3/2 up top and a basement 2/1 space. Total rents will be around $3500 conservatively. After PTI, management, r&m, vacancy, and mandatory hoa fee it'll cash flow nearly $200.

    2Reply
  • Conner Olsen
    Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes
    4y

    @Sai Medavarapu 78724 is having a lot of growth with the new Tesla factory in that area.

    1Reply
  • Bob E.
    Queen Creek, AZ · Member since 2014 · 2k+ posts · 1k+ votes
    4y

    @Sai Medavarapu  I would suggest waiting 6 months.  Supply is ramping up just as demand is dropping off.  I think if you are patient you will be rewarded.  Be prepared for higher financing rates and lower prices but don't sweat the rates, You can always refinance latter when rates drop.  

    9Reply
  • Joe HammelBusiness Member
    Real Estate Agent · Metro Detroit, MI · Member since 2018 · 612 posts · 666 votes
    4y

    @Sai Medavarapu

    Metro Detroit

    (my rental portfolio is here)

    Purchase: $80k-$130k

    Rent: $1200-$1500

    ROI: Double Digit

    Cash flow: couple hundred/month

    Appreciation: Double digit (for past 10 years, will gladly send data)

    Location: C, B- (suburbs and certain markets)

    We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, mortgage, Amazon fulfillment, and more jobs.

    The bad reputation comes from OOS investors wanting $20k D market properties. Don’t buy those lol.

    Investors can retire (FIRE) in a few years with the properties described above.

    We/Clients/I love them.

    [email protected]248-422-1685
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    2Reply
  • Yinka TaiwoPro Member
    Rental Property Investor · Atlanta, GA · Member since 2022 · 52 posts · 16 votes
    4y

    @Andres Murillo which zip code in ATL is that? I'm looking for similar. Congrats

    1Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    4y

    @Sai Medavarapu

    You might want to follow the "Deep Dive" series we're doing on our BiggerPockets blog about Metro Detroit cities, City of Detroit Neighborhoods and comparing Metro Detroit to other hotspots investors usually consider:

    https://www.biggerpockets.com/...

    [email protected]248-209-6824
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  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    4y

    I agree with @Bob E. . We're looking at properties but not taking on big challenges or negative cash-flowing rentals. If the numbers don't look promising before walking a property I'm not wasting anyone's time. I'm watching the data below and seeing how fast supply increases this year. We still have a long ways to go. 

    https://fred.stlouisfed.org/se...

    1Reply
  • Andy Grizzell
    Real Estate Agent · Columbus, OH · Member since 2022 · 36 posts · 33 votes
    4y

    There are a lot of opportunities in and around Columbus, Oh with cash flow potential. Central Ohio market demand is still high with all of the new jobs being announced as we're growing to be a mid-west tech giant. Decent MF and SF opportunities pop up regularly and are quick to go to people who are prepared to analyze quickly and jump on them. 

    2Reply
  • Hung T Nguyen
    Member since 2022 · 17 posts · 4 votes
    4y
    Quote from @Chris Seveney:

    @Sai Medavarapu

    Just look at any city with high crime or a city with a D neighborhood

    It will cash flow on paper.


     You've peaked my interest. Can you please elaborate? Thx

    0Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    4y

    I would recommend staying in your immediate market, at least an hour radius from where you live. A few ways to create cash flow
    1. find extremely distressed situations and buy at a discount 

    2. Airbnb or rent your property by the room  

    1Reply
  • Maria Cox
    Flipper/Rehabber · Atlanta, GA · Member since 2016 · 55 posts · 19 votes
    4y

    Fayetteville, NC 

    There is Fort Bragg there which you can tap into the military base. 

    You can find properties in decent pockets for $150k or less 

    You can get market rents between $1100 - $1300 depending on the area. 

    2Reply
  • Nicholas MischPro Member
    Investor · Broadview Hts, OH · Member since 2016 · 310 posts · 280 votes
    4y
    Quote from @Sai Medavarapu:

    Hello all,

    I would like to know on how to research the cities in which there could be a cash flow on property after 20% down. 
    OR are there any cities that you guys have in mind that have returns as such. Currently, in Phoenix market. I barely see a decent property returning 100$ cashflow after 20% down. It was way different a year half ago.


    Please suggest a few cities. 


    Thank you.


     Cleveland and Akron have many opportunities for cash flow, and not just in "D" areas as some have suggested. You really should connect with experts in the market you want to invest in who really know how to find you what your looking for. Be careful as some people will tell you what your looking for doesn't exist so you will stop looking, so they can have it for themselves. Never give up!

    0Reply
  • Hung T Nguyen
    Member since 2022 · 17 posts · 4 votes
    4y
    Quote from @Joe Hammel:

    @Sai Medavarapu

    Metro Detroit

    (my rental portfolio is here)

    Purchase: $80k-$130k

    Rent: $1200-$1500

    ROI: Double Digit

    Cash flow: couple hundred/month

    Appreciation: Double digit (for past 10 years, will gladly send data)

    Location: C, B- (suburbs and certain markets)

    We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare, Auto, mortgage, Amazon fulfillment, and more jobs.

    The bad reputation comes from OOS investors wanting $20k D market properties. Don’t buy those lol.

    Investors can retire (FIRE) in a few years with the properties described above.

    We/Clients/I love them.

    Hi Joe. that is exactly my market model. Is the rent you stated LTR? If so, what does the STR market look like in Detroit?

    0Reply
  • Joe HammelBusiness Member
    Real Estate Agent · Metro Detroit, MI · Member since 2018 · 612 posts · 666 votes
    4y

    @Hung T Nguyen

    Hi Hung, yes those numbers are for ltr. We have an agent on the team having good success with str. Str is a game of supply and demand. So while people think of tourist towns as great str markets in actuality, they have higher prices and way more supply of str available so the margins are good but not great.

    Since a lot of people don’t think of metro detroit as a booming str market the supply available is low but there’s always demand for hotels/houses with 1-10 night stays available so metro detroit actually has really good margins.

    Prices $180-$350k

    Rents $150-$300+ per night

    Occupancy: about 60-75%

    Put those numbers into a calculator and the roi nears and sometimes breaks 20% cocroi.

    There is just a little more skill involved in navigating them.

    I actually have a 1 bedroom unit in a 4-plex that I own that I plan on listing as a str to give it a try. It’s in a good market, hospital near by (lots of executives and traveling nurses here in MI) so I think it could do pretty well.

    [email protected]248-422-1685
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    1Reply
  • Hung T Nguyen
    Member since 2022 · 17 posts · 4 votes
    4y

    @Joe Hammel Yea, thanks for confirming what I have always thought. I'm from Houston, so the market here is way over saturated. It's crazy here. No licensing required! So now I've shifted my focused to all of Texas (not Houston) with that market model you mentioned, but when I'm ready I may traverse out of state and into the the Detroit area. When I do, I'll hit you up. Go Motor City!

    0Reply
  • Wale LawalBusiness Member
    Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
    4y

    @Sai Medavarapu

    I am in Houston Texas and you can find properties here with steady cash flow.

    Also rental income growth and appreciation here are good in Houston Texas.

    Goodluck!

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  • Kenneth Mooney
    Rental Property Investor · Augusta, GA · Member since 2016 · 348 posts · 171 votes
    4y

    @Sai Medavarapu Certain cities lend themselves to higher cashflow, for sure. However, the ability to cashflow is everywhere if you find the right deal. I buy cash flowing assets quite regularly and know of many funds/entities who do it all across the southeast. It partially depends on your management operation as well. A lot of these hedge funds (the good ones at least) that you see are able to pay more for housing because their management expenses are SIGNIFICANTLY less due to the scale at which they purchase. Lots of variables that go into "cashflow" as everyones situation is different. 

    Hope that helps. 

    0Reply
  • Joe HammelBusiness Member
    Real Estate Agent · Metro Detroit, MI · Member since 2018 · 612 posts · 666 votes
    4y

    @Hung T Nguyen

    Sounds like a plan!

    Best of luck!

    Go motor city!

    [email protected]248-422-1685
    FIRE Realty Team - Keller Williams5379 Reviews
    WebsiteView Page
    0Reply
  • Chris U.Pro Member
    Investor · Raleigh, NC · Member since 2015 · 21 posts · 7 votes
    4y

    @Sai Medavarapu

    I know this is an older thread, but I thought it was worth responding to. I'm fairly new to real estate investing, so take what I say with a grain of salt. Generally what @Chris Seveney says is true -- "Just look at any city with high crime or a city with a D neighborhood. It will cash flow on paper."

    The last bit is the important part, and I'm sure that he's included it for a reason. Like in most areas of business, higher risk comes with higher reward (and often greater amounts of effort). Managing what I'm sure is likely a nice property in Phoenix will be very different to managing a high cash flowing property in a high crime area or a D neighborhood. Your cashflow will be greater on paper as Chris S says, but you'll need to take into account that you'll need to do more leg work on screening tenants and may have to put up with more headaches in the day-to-day management (e.g. tenant unable to pay rent, tenant is gone, house gets broken into, etc).

    To add onto the bit about the D neighborhood, if you can find a property in an area that's experiencing rapid growth and development, you can likely get a return on the appreciation and the rents may go up too. You'll need an experienced local agent to navigate those neighborhoods though. And as mentioned by others, distressed properties anywhere can cashflow.

    You may also want to take a look at an STR or mid-term rental. There's effort in managing these, but you might not have to deal with some of the issues that you would in a high-crime area.

    PS $100 Cashflow might not seem all that great. But if you're in Phoenix with a hands-off property that's not a bad situation to be in. 
      

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