All Forum Posts by: Jason Wray

You have to take into consideration a few things like Location, Property type, Number of Units, and which will yield a higher ROI like LTR or STR using VRBO/AirBNB. In some cases you will have a hard time cash flowing as a long term rental on a single family home above $300K if the Annual Taxes and Home owners insurances are above average. If you look at a 2-4 unit at that price range it should cash flow based on the multiple doors.

If you are going to spend above $300K you need to look in different amenity areas which offer a good VRBO -STR style rent to cash flow. One you get into the $350K to $550K price range you should be looking at 3-4 unit style properties or even 2-unit/Duplex style homes with a good size lot that can also offer an ADU option to increase rents without construction to the subject property.

I can give you an example here in Florida in my market you can find a great Duplex or 3-4 Unit Multifamily in that range of $300K to $550K. In many cases these properties are within 5-10 minutes from any local beach or attraction. Most investors I know have VRBO properties that Gross $8-$10K a month for a Duplex. That cash flows well above the PITI payment including management fee's and other factors.

If you really want to spend more money $850K to $1.25M you can get a 2-4 unit directly on the beach which are booked 6-8 months in advance. If you want to stay lean and buy frugal many states not just Florida offer a solid ROI. I am seeing a lot of activity in IN, OH, TN, FL, OR, TX, AZ, NV. Each has its own particular advantage and price range but some offer low annual taxes and insurances that help with cash flow like TN.

Brett,

First off great idea and its very possible to make that all happen with a plan. Second you only need 15% down for an investment even up to 4 units. Do not put more down if you can save it for renovations or to keep as an asset since its better to be cash fluid. The more properties you buy the more "liquid reserves" you will need to satisfy the PITI reserve underwriting requirements.

Once you quit your W2 job or go to part time you can use a DSCR or Bank Statement loan to buy more investment properties. Depending on where you are looking to buy location can help increase cash flow. If you can buy in an area where STR like VRBO/AIRBNB is popular it can maximize your ROI/cash flow. Some STR's can quadruple the cash flow versus LTR - long term rentals.

If you can find a good deal on a 2-4 unit the more doors the more cash flow to set up a better ROI. Luckily mortgage rates are starting to drop so as you shop or pull out cash it should become good timing. The other thing is try to avoid turn key if you have inventory that can pass an appraisal but needs some TLC. Since you have access to funds and a Heloc it might make more sense to buy something and do some light repairs/renovations.

That way you can increase your ARV to help get the cash out quicker to get to the next REI purchase. Put together a good team seasoned Realtor, seasoned Banker/Loan officer, and ask around about contractors if you decide to renovate. A good realtor with work with you Banker to design a long term plan to keep the ball rolling. Have these conversations up front so that your maximizing your financials, and properties.

Zander - Reach out to Mario A. Reed and tell him Jason Wray sent you he is over by my Corporate office.  Great attorney, reviews and handles all Real Estate law.

Thats an easy fix DSCR all the way we do not look at income or employment. 1031 allows you to move the funds into the next property tax free. Simple paper work during processing takes care of that part. Great thing about a 1031 exchange is you can put a higher down payment or all of the funds into the new property and take cash out as early as 6 months with DSCR on a cash out refinance.

FHA 203K can be a great way to get a good deal on a 2-4 unit that needs rehab. The results could be higher ARV and rents as long as the market supports. One downfall is 203K is not a super easy program when it comes to processing and time frame. You will need to supply 2-3 quotes from different General Contractor's or licensed builder for all work.

Some things that can occur are builder/vendor issues with lack of inventory, broken material, employee "no shows", date of completed work extensions, bad work, additional costs not factored on blue prints or cost analysis, delayed permits.

Keep in mind any delays or issues will slow down your clear to close/funding date. That can also cause issues with expired mortgage rates, rate lock extension costs/fee's. This is not a scare tactic its more of a buyer beware to do research and pick a good Bank/lender

.

Dan

You are not alone because at a first glance it does seem like cash flow can be impossible in some states. California for example taxes, HOA's, Sale prices all seem to eat any cash flow right out of the gate. Where it does calculate out to an ROI is in other states where you can buy a 2-4 unit and the other doors allow the cash flow. You also have a large population of STR's using VRBO/AIRBNB and other options to collect much higher ROI's.

Location is key but sale price comes in a fast second with rents per door right behind. You also have to look at the ARV potential and that alone can supersede first few years cash flow. Meaning if you can find a property that has walk in equity or can be renovated to pull out a good sum of cash within the first 6-12 months to allow you to buy more REI its a big factor.

Finding good deals that cash flow or yield a high ARV can be a mixture or Luck and Skill mixed with timing. If you are always looking for a deal, talking to other agents, investors, and simply driving neighborhoods. You will eventually come across 1-2 deals a year that you might not have found if you were just in idle.

Make sure you understand your buying options because I talk to a lot of investors who have limited information. You only need to put 15% down on an investment property even up to 4 units. PMI is not always a deal killer if you can save funds and stay cash fluid or put money towards renovations and less on the down payment.

You can also use a Vacation home to buy out of state and only put 10% down but must be a single family, Condo, Townhome (No 2-4 units). Can be used as a rental and you simply refinance the second year or in 12 months to convert. Loopholes can be a great tool if used correctly.

One thing I would suggest is reach out to a few agents here on the BP forum in the states your searching and ask to be added to their 'Hot Sheet". Some agents push out a "Hot Sheet" weekly or monthly where they have deals on cash flowing rentals.

The exemption can be switched to the new home but not both if it will be converted into a rental.  You can appply for an exemtion if it were a vacation home, but not rental.  You typically want to keep the exemption on the home that carries the higher tax.

Hi Cody,

Nice to meet you if you have any questions send me a message be happy to have a conversation and talk REI.

Benjamin,

My advice would be to treat it as a Vacation home and use financing so that you save on only having to put 10% Down & No Prepays. Great thing about Vacation homes is you can use it as an STR and only need to occupy several days out of the year. I would refinance it in 12-24 months and transition it into a investment for tax purposes but that's up to you and your family.

Good call on that STR and location I have had some around Kittery and North Conway, NH. Great idea based on a year round secret that most never even realize is a cash flow opportunity. Most ski-in-ski-out places in the NE get frowned upon by Mid-West skier because they think we are all ice. Go up after a great snow day to Bretton Woods, Wildcat, Spruce Peak, Stratton and its all thick powder!

Now compare the lift costs, rentals, and lodging to out West and its a fraction of the price. Its great all year round with golf, hiking, white water, camping and fishing in the summer. Snowboarding, Skiing, Ice fishing, Hunting, and Christmas vacations in general in the winter,

Feel free to reach out if you have any questions always happy to talk REI or the North East!

Great place to invest I would talk to @Lucia Rushton thats her area she may have some additional leads and advice.  I have worked with her in the past great agent and was able to find my buyer a great cash flow property.