Monthly cash flow dead?
Columbia, MO · Member since 2022 · 122 posts · 66 votes
Monthly cash flow dead?
Most Popular Reply
Investor · Member since 2021 · 591 posts · 695 votes
3y@David Lund you're correct--cashflow is tough to find (it has been for a while in most markets).
However, in my experience, cashflow is rarely "found". Instead, cashflow is created.
This is similar to the RE saying "deals aren't found, they're made."
So, the obvious question is: "ok, how do I create cashflow?"
It often comes down to learning to see something in a property that other buyers don't see. For instance, being able to spot an easy opportunity to add a bedroom or a bathroom to a property...if it's an easy conversion, and it's on the right type of property in the right market, 10-20k spent to add a br and/or bathroom can pick you up an extra 500-1000 per month in rent...do the math, and you'll find that that is some incredible cash on cash return.
All sorts of rehabs/conversions can turn a total loser into a cashflowing property. ...another example: I've built ADUs in previously unfinished basements, which turned properties that were $500/mo negative into properties that now cashflow 1000/mo ...the power move was rolling the construction debt into refis on other properties at lower rates, which more than negated the construction debt...in other words, I got paid to build the ADUs (these days, this isn't usually possible--or at least, it's a lot less likely--now that rates are rising...but who knows, rates might decrease again at some point...).
...Although certain rehabs/conversions can force cashflow, there is real skill and art to spotting properties that are good candidates for these types of rehabs/conversions. ...an effective rehab/conversion is often a lot trickier than HGTV would have you believe, and choosing the wrong property to do this can completely blow up the financial model.
Another approach is to learn to find properties that have something that turns off other buyers, but which is irrelevant to cashflow, and irrelevant to your business model. For instance, I've bought properties in A class neighborhoods where EVERYONE wanted to live, but they were on relatively busy streets, which turned off retail buyers. However, I knew the streets weren't so busy that they would impact the rentability of the properties... I picked up the properties for a heavily discounted price (because they had sat on the market), and had no problems finding highly qualified (and high-earning) tenants that made the place cashflow right out of the gate.
Another example: I once bought a property in an A class neighborhood that had an awkwardly-placed stairwell inside the front entrance, which turned off other buyers. However, I knew that the stairwell had zero impact on the actual functionality of the property, and that it would have zero impact on its desirability as a rental. Once again, the property sat on the market for a long time, I bought it at a heavy discount, and it's been cash flowing ever since.
By the way: every property I own cashflows well, and every property I own was bought on the MLS between 2016 and now--during what was probably the toughest buyer's market in American history! (I didn't have to look for off market deals, do weird business arrangements, or do anything unusual at all to get these properties, even in a tough buyer's market...shocker, I know!).
So, in summary: it is possible to get cashflow, but it's just not something that can be had without some effort and sacrifices...you have to go where others aren't going, and do what others aren't doing.
If it were possible to succeed at RE investing by buying turnkey, A class, perfect properties with no flaws, then everyone would be doing it! ...but, the reality is: RE investing takes creativity and flexible thinking, the ability to see opportunities others miss, the willingness to acquire properties others don't want, and the willingness to do what it takes to force cashflow.
Good luck out there!
28 Replies
- Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes3y
Look into cash flowing in different ways, like airbnb, rent by the room. Or cheaper markets with great rental rates, Killeen Texas is a good cash flow market
- Investor & Agent · Tulsa, OK · Member since 2016 · 1k+ posts · 1k+ votes3y
Deals aren’t found, they are made.
They can be created via off-market strategies and a willingness to buy distressed...
- Columbia, MO · Member since 2022 · 122 posts · 66 votes3yThank you Eliott!!
Quote from @Eliott Elias:
Look into cash flowing in different ways, like airbnb, rent by the room. Or cheaper markets with great rental rates, Killeen Texas is a good cash flow market
- Columbia, MO · Member since 2022 · 122 posts · 66 votes3y
Quote from @Nate Sanow:
Deals aren’t found, they are made.
They can be created via off-market strategies and a willingness to buy distressed...
Great advice and gives me a new perspective to think about! Do you have any suggestions for off-market strategies that I can research? @Nate Sanow
- Member since 2022 · 28 posts · 16 votes3y
Quote from @David Lund:
I am having trouble finding any properties that cash flow after considering mortgage, insurance, cap ex, vacancy rate, etc. Have you had any luck in your areas? It's starting to become a pretty big concern as a new investor wanting to get into the market.
Any advice or insight is appreciated!
Please don’t be fooled…
YOU ARE CORRECT…
There are too many people WAY…overspending on “ investment” properties….therefore… with mortgage debt too high… there …IS … no cash flow..To be perfectly honest and a little mean…… I am tracking the manes of the mentors and gurus in my town that aren’t raising hell about over spending…
When / if the next crash happens, they will be all over the REIA circuit selling foreclosure and short sale courses…
And I will be there too… asking open ended questions that lead to no other answer that… THE REIAs and the GURUS were a part of the reason that so many young naive investors went BK.
and… yes… if the crash happens… I am locked and loaded.
experience in Short Sales.. ( worked …IN… Bank of America’s short sale department… so I KNOW the process from their side of the transaction)
killer cash
Killer credit
killer Instinct - 3yRobin SimonBusiness MemberLender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
Quote from @David Lund:
I am having trouble finding any properties that cash flow after considering mortgage, insurance, cap ex, vacancy rate, etc. Have you had any luck in your areas? It's starting to become a pretty big concern as a new investor wanting to get into the market.
Any advice or insight is appreciated!
Price drops of purchases are lagging right now - the best thing to do IMO to deal with this is to not be afraid to make a lot of "lowball" offers - chances are one out of X will be accepted, just only offer on properties what would cash flow for you
Harpoon Capital514 Reviews - Investor & Agent · Tulsa, OK · Member since 2016 · 1k+ posts · 1k+ votes3y
Quote from @David Lund:
Quote from @Nate Sanow:
Deals aren’t found, they are made.
They can be created via off-market strategies and a willingness to buy distressed...
Great advice and gives me a new perspective to think about! Do you have any suggestions for off-market strategies that I can research? @Nate Sanow
Get on wholesalers lists or learn how to wholesale… basically. You don’t have to be a wholesaler but you do need the same skill to get off market you just can be your own end buyer.
- 3yJay ThomasPro MemberReal Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
Deals can be made by harnessing the power of off-market strategies. These strategies involve understanding distressed markets and having the willingness to buy properties in those areas that are undervalued. Deals can be found in areas such as foreclosures, pre-foreclosures, short sales, auctions, tax sales, probates, REOs, and abandoned properties. By taking advantage of these types of off-market strategies, savvy investors can find deals that have great potential for return on investment.
- Investor · Los Angeles, CA · Member since 2012 · 1k+ posts · 500 votes3y
I'd suggest looking into duplexes, triplexes, etc if you are looking for cash flow.
- Investor · Member since 2021 · 591 posts · 695 votes3y
@David Lund you're correct--cashflow is tough to find (it has been for a while in most markets).
However, in my experience, cashflow is rarely "found". Instead, cashflow is created.
This is similar to the RE saying "deals aren't found, they're made."
So, the obvious question is: "ok, how do I create cashflow?"
It often comes down to learning to see something in a property that other buyers don't see. For instance, being able to spot an easy opportunity to add a bedroom or a bathroom to a property...if it's an easy conversion, and it's on the right type of property in the right market, 10-20k spent to add a br and/or bathroom can pick you up an extra 500-1000 per month in rent...do the math, and you'll find that that is some incredible cash on cash return.
All sorts of rehabs/conversions can turn a total loser into a cashflowing property. ...another example: I've built ADUs in previously unfinished basements, which turned properties that were $500/mo negative into properties that now cashflow 1000/mo ...the power move was rolling the construction debt into refis on other properties at lower rates, which more than negated the construction debt...in other words, I got paid to build the ADUs (these days, this isn't usually possible--or at least, it's a lot less likely--now that rates are rising...but who knows, rates might decrease again at some point...).
...Although certain rehabs/conversions can force cashflow, there is real skill and art to spotting properties that are good candidates for these types of rehabs/conversions. ...an effective rehab/conversion is often a lot trickier than HGTV would have you believe, and choosing the wrong property to do this can completely blow up the financial model.
Another approach is to learn to find properties that have something that turns off other buyers, but which is irrelevant to cashflow, and irrelevant to your business model. For instance, I've bought properties in A class neighborhoods where EVERYONE wanted to live, but they were on relatively busy streets, which turned off retail buyers. However, I knew the streets weren't so busy that they would impact the rentability of the properties... I picked up the properties for a heavily discounted price (because they had sat on the market), and had no problems finding highly qualified (and high-earning) tenants that made the place cashflow right out of the gate.
Another example: I once bought a property in an A class neighborhood that had an awkwardly-placed stairwell inside the front entrance, which turned off other buyers. However, I knew that the stairwell had zero impact on the actual functionality of the property, and that it would have zero impact on its desirability as a rental. Once again, the property sat on the market for a long time, I bought it at a heavy discount, and it's been cash flowing ever since.
By the way: every property I own cashflows well, and every property I own was bought on the MLS between 2016 and now--during what was probably the toughest buyer's market in American history! (I didn't have to look for off market deals, do weird business arrangements, or do anything unusual at all to get these properties, even in a tough buyer's market...shocker, I know!).
So, in summary: it is possible to get cashflow, but it's just not something that can be had without some effort and sacrifices...you have to go where others aren't going, and do what others aren't doing.
If it were possible to succeed at RE investing by buying turnkey, A class, perfect properties with no flaws, then everyone would be doing it! ...but, the reality is: RE investing takes creativity and flexible thinking, the ability to see opportunities others miss, the willingness to acquire properties others don't want, and the willingness to do what it takes to force cashflow.
Good luck out there!
- Columbia, MO · Member since 2022 · 122 posts · 66 votes3yGreat insight. Thank you!
Quote from @James NA:
Quote from @David Lund:
I am having trouble finding any properties that cash flow after considering mortgage, insurance, cap ex, vacancy rate, etc. Have you had any luck in your areas? It's starting to become a pretty big concern as a new investor wanting to get into the market.
Any advice or insight is appreciated!
Please don’t be fooled…
YOU ARE CORRECT…
There are too many people WAY…overspending on “ investment” properties….therefore… with mortgage debt too high… there …IS … no cash flow..To be perfectly honest and a little mean…… I am tracking the manes of the mentors and gurus in my town that aren’t raising hell about over spending…
When / if the next crash happens, they will be all over the REIA circuit selling foreclosure and short sale courses…
And I will be there too… asking open ended questions that lead to no other answer that… THE REIAs and the GURUS were a part of the reason that so many young naive investors went BK.
and… yes… if the crash happens… I am locked and loaded.
experience in Short Sales.. ( worked …IN… Bank of America’s short sale department… so I KNOW the process from their side of the transaction)
killer cash
Killer credit
killer Instinct - Columbia, MO · Member since 2022 · 122 posts · 66 votes3y
Quote from @Robin Simon:
Quote from @David Lund:
I am having trouble finding any properties that cash flow after considering mortgage, insurance, cap ex, vacancy rate, etc. Have you had any luck in your areas? It's starting to become a pretty big concern as a new investor wanting to get into the market.
Any advice or insight is appreciated!
Price drops of purchases are lagging right now - the best thing to do IMO to deal with this is to not be afraid to make a lot of "lowball" offers - chances are one out of X will be accepted, just only offer on properties what would cash flow for you
Hey Robin! That’s what I was thinking as well.
- Columbia, MO · Member since 2022 · 122 posts · 66 votes3y
Quote from @Nate Sanow:
Quote from @David Lund:
Quote from @Nate Sanow:
Deals aren’t found, they are made.
They can be created via off-market strategies and a willingness to buy distressed...
Great advice and gives me a new perspective to think about! Do you have any suggestions for off-market strategies that I can research? @Nate Sanow
Get on wholesalers lists or learn how to wholesale… basically. You don’t have to be a wholesaler but you do need the same skill to get off market you just can be your own end buyer.
@Nate Sanow is wholesaling something you do with an agent or alone?
- Columbia, MO · Member since 2022 · 122 posts · 66 votes3y
Quote from @Jay Thomas:
Deals can be made by harnessing the power of off-market strategies. These strategies involve understanding distressed markets and having the willingness to buy properties in those areas that are undervalued. Deals can be found in areas such as foreclosures, pre-foreclosures, short sales, auctions, tax sales, probates, REOs, and abandoned properties. By taking advantage of these types of off-market strategies, savvy investors can find deals that have great potential for return on investment.
Great advice Jay! I’ll have to check these out
- Columbia, MO · Member since 2022 · 122 posts · 66 votes3yYeah watching my market frequently helps knowing how things are changing
Quote from @V.G Jason:
Mortgage: Rent ratio hasn't really firmed up properly, in the rest of this market that's cratering. That'll come. Some markets that may never come, but in most it'll come for sure.
- Columbia, MO · Member since 2022 · 122 posts · 66 votes3ySuch great advice Leo! Thank you for taking the time to write this and help change my mindset
Quote from @Leo R.:
@David Lund you're correct--cashflow is tough to find (it has been for a while in most markets).
However, in my experience, cashflow is rarely "found". Instead, cashflow is created.
This is similar to the RE saying "deals aren't found, they're made."
So, the obvious question is: "ok, how do I create cashflow?"
It often comes down to learning to see something in a property that other buyers don't see. For instance, being able to spot an easy opportunity to add a bedroom or a bathroom to a property...if it's an easy conversion, and it's on the right type of property in the right market, 10-20k spent to add a br and/or bathroom can pick you up an extra 500-1000 per month in rent...do the math, and you'll find that that is some incredible cash on cash return.
All sorts of rehabs/conversions can turn a total loser into a cashflowing property. ...another example: I've built ADUs in previously unfinished basements, which turned properties that were $500/mo negative into properties that now cashflow 1000/mo ...the power move was rolling the construction debt into refis on other properties at lower rates, which more than negated the construction debt...in other words, I got paid to build the ADUs (these days, this isn't usually possible--or at least, it's a lot less likely--now that rates are rising...but who knows, rates might decrease again at some point...).
...Although certain rehabs/conversions can force cashflow, there is real skill and art to spotting properties that are good candidates for these types of rehabs/conversions. ...an effective rehab/conversion is often a lot trickier than HGTV would have you believe, and choosing the wrong property to do this can completely blow up the financial model.
Another approach is to learn to find properties that have something that turns off other buyers, but which is irrelevant to cashflow, and irrelevant to your business model. For instance, I've bought properties in A class neighborhoods where EVERYONE wanted to live, but they were on relatively busy streets, which turned off retail buyers. However, I knew the streets weren't so busy that they would impact the rentability of the properties... I picked up the properties for a heavily discounted price (because they had sat on the market), and had no problems finding highly qualified (and high-earning) tenants that made the place cashflow right out of the gate.
Another example: I once bought a property in an A class neighborhood that had an awkwardly-placed stairwell inside the front entrance, which turned off other buyers. However, I knew that the stairwell had zero impact on the actual functionality of the property, and that it would have zero impact on its desirability as a rental. Once again, the property sat on the market for a long time, I bought it at a heavy discount, and it's been cash flowing ever since.
By the way: every property I own cashflows well, and every property I own was bought on the MLS between 2016 and now--during what was probably the toughest buyer's market in American history! (I didn't have to look for off market deals, do weird business arrangements, or do anything unusual at all to get these properties, even in a tough buyer's market...shocker, I know!).
So, in summary: it is possible to get cashflow, but it's just not something that can be had without some effort and sacrifices...you have to go where others aren't going, and do what others aren't doing.
If it were possible to succeed at RE investing by buying turnkey, A class, perfect properties with no flaws, then everyone would be doing it! ...but, the reality is: RE investing takes creativity and flexible thinking, the ability to see opportunities others miss, the willingness to acquire properties others don't want, and the willingness to do what it takes to force cashflow.
Good luck out there!
- Investor & Agent · Tulsa, OK · Member since 2016 · 1k+ posts · 1k+ votes3y
Quote from @David Lund:
Quote from @Nate Sanow:
Quote from @David Lund:
Quote from @Nate Sanow:
Deals aren’t found, they are made.
They can be created via off-market strategies and a willingness to buy distressed...
Great advice and gives me a new perspective to think about! Do you have any suggestions for off-market strategies that I can research? @Nate Sanow
Get on wholesalers lists or learn how to wholesale… basically. You don’t have to be a wholesaler but you do need the same skill to get off market you just can be your own end buyer.
@Nate Sanow is wholesaling something you do with an agent or alone?
Most agents don’t wholesale. If you find one who does you could squad up but I wouldn’t look there. Also off market isn’t equivalent to wholesale…initially I was referring to off market opportunities, learning how to get those - and the real trick is agents can represent you on those and have more access to those than they or most people think.
- Member since 2019 · 172 posts · 93 votes3y
since this is on the house hacker subforum are you referring to potential house hacks not cash flowing? If so I don't think a house hacks has to cash flow to be a good deal. At the end of the day you still need a primary residence and having extra income coming in from your house still helps even if it doesn't pay all of your expenses.
- Realtor · Columbus Ohio, Cleveland Ohio · Member since 2022 · 849 posts · 830 votes3y
Quote from @David Lund:
I am having trouble finding any properties that cash flow after considering mortgage, insurance, cap ex, vacancy rate, etc. Have you had any luck in your areas? It's starting to become a pretty big concern as a new investor wanting to get into the market.
Any advice or insight is appreciated!
Ohio is still cashflowing very well! Especially Cleveland. Its not hard to find 2% rules here
- Columbia, MO · Member since 2022 · 122 posts · 66 votes3y
Quote from @Nathan Williams:
since this is on the house hacker subforum are you referring to potential house hacks not cash flowing? If so I don't think a house hacks has to cash flow to be a good deal. At the end of the day you still need a primary residence and having extra income coming in from your house still helps even if it doesn't pay all of your expenses.
Yeah the goal is to live in SFH or one side of duplex for a year then turn it into a full rental, because I'll most likely move states after a year. So yes the first year would still be beneficial but afterwards it would need to cash flow @Nathan Williams
- Columbia, MO · Member since 2022 · 122 posts · 66 votes3y
Quote from @Simon Ashbaugh:
Quote from @David Lund:
I am having trouble finding any properties that cash flow after considering mortgage, insurance, cap ex, vacancy rate, etc. Have you had any luck in your areas? It's starting to become a pretty big concern as a new investor wanting to get into the market.
Any advice or insight is appreciated!
Ohio is still cashflowing very well! Especially Cleveland. Its not hard to find 2% rules here
Oh wow! I’m glad some markets are still doing great
- Columbia, MO · Member since 2022 · 122 posts · 66 votes3y
Quote from @Nate Sanow:
Quote from @David Lund:
Quote from @Nate Sanow:
Quote from @David Lund:
Quote from @Nate Sanow:
Deals aren’t found, they are made.
They can be created via off-market strategies and a willingness to buy distressed...
Great advice and gives me a new perspective to think about! Do you have any suggestions for off-market strategies that I can research? @Nate Sanow
Get on wholesalers lists or learn how to wholesale… basically. You don’t have to be a wholesaler but you do need the same skill to get off market you just can be your own end buyer.
@Nate Sanow is wholesaling something you do with an agent or alone?
Most agents don’t wholesale. If you find one who does you could squad up but I wouldn’t look there. Also off market isn’t equivalent to wholesale…initially I was referring to off market opportunities, learning how to get those - and the real trick is agents can represent you on those and have more access to those than they or most people think.
Great advice as always!
- Realtor · Columbus Ohio, Cleveland Ohio · Member since 2022 · 849 posts · 830 votes3y
Quote from @David Lund:
Quote from @Nate Sanow:
Quote from @David Lund:
Quote from @Nate Sanow:
Quote from @David Lund:
Quote from @Nate Sanow:
Deals aren’t found, they are made.
They can be created via off-market strategies and a willingness to buy distressed...
Great advice and gives me a new perspective to think about! Do you have any suggestions for off-market strategies that I can research? @Nate Sanow
Get on wholesalers lists or learn how to wholesale… basically. You don’t have to be a wholesaler but you do need the same skill to get off market you just can be your own end buyer.
@Nate Sanow is wholesaling something you do with an agent or alone?
Most agents don’t wholesale. If you find one who does you could squad up but I wouldn’t look there. Also off market isn’t equivalent to wholesale…initially I was referring to off market opportunities, learning how to get those - and the real trick is agents can represent you on those and have more access to those than they or most people think.
Great advice as always!
Start cold calling for offmarket deals! that's how i find all mine
- Columbia, MO · Member since 2022 · 122 posts · 66 votes3y
Quote from @Simon Ashbaugh:
Quote from @David Lund:
Quote from @Nate Sanow:
Quote from @David Lund:
Quote from @Nate Sanow:
Quote from @David Lund:
Quote from @Nate Sanow:
Deals aren’t found, they are made.
They can be created via off-market strategies and a willingness to buy distressed...
Great advice and gives me a new perspective to think about! Do you have any suggestions for off-market strategies that I can research? @Nate Sanow
Get on wholesalers lists or learn how to wholesale… basically. You don’t have to be a wholesaler but you do need the same skill to get off market you just can be your own end buyer.
@Nate Sanow is wholesaling something you do with an agent or alone?
Most agents don’t wholesale. If you find one who does you could squad up but I wouldn’t look there. Also off market isn’t equivalent to wholesale…initially I was referring to off market opportunities, learning how to get those - and the real trick is agents can represent you on those and have more access to those than they or most people think.
Great advice as always!
Start cold calling for offmarket deals! that's how i find all mine
Thank you!
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