What do you consider a great cash flow deal?

What is a good cash flow deal? I was always taught that a good cash flow deal is when rents are 1% of purchase. In this article, rehab is already included in the purchase. So if the property rents for $1000, then you would be willing to pay $100,000 for that property. Would you be happy with that sort of cash flow. Let’s do some calculations. At 6% interest on a 30 year fixed, you are paying $600. Add $200 for tax and insurance and you cash flow $200, right? Well, what about property management of $100, and vacancy of 10% or $100. Now you are breaking even. And who thinks they will never have to spend a penny on maintenance? An investor could end up negative cash flow on a deal with these numbers. Then you are left to speculate for appreciation which is completely out of our control.

I believe a good cash flow deal is when rents are 1.5 - 3% of purchase. Or rents are double PITI. In the above scenario we are looking at $1500 - $3000 in rents. That is some great cash flow. Let’s look at another example of a great cash flow deal.

 www.realreturnrealestate.com