All Forum Posts by: John Russo

 It is hard to find deals on zilow mls etc.... but market is softening, more houses are staying oin the market.

You can identify houses that has been sitting on the market for a while and make lower offers on them, I am currently working on one actually, offered 50K low and so far we are negotiating , also you can start connecting all the wholesalers out there unless you want to find your own deals by doing drive by dollar, or cold calling etc...

@John Russo some really great detailed answers have been lent already so I am going to keep myself to really basic "straight-talk". 

You gotta change what your doing because that world does NOT exist anymore, and it isn't coming back for a loooooong time. 

We are at a pivot point of a 40yr cycle. It's a $$$$ cycle. 

Past 40yrs $$$$ has been on various "sales". So combine $$$$ "on-sale" with growing cities and various housing blip's and it's made times where it was really easy to just buy a place, almost any place really, and make $ on the spread with a bit of time. 

2008 was the biggest "blip" and $$$$ went on the biggest sale ever, it was literally free (for the banks that is). So yeah, it was CRAZY easy to buy almost anything, anywhere, and cash-flow right out the gate. 

That is NOT normal. It's never been normal, literally ever. That wasn't just a once in a lifetime opportunity, it was a once in multiple lifetime's kind of thing. 

It's NEVER coming back man, NEVER. 

There is no cycle of such a thing, there is not 10 or 20yr or any of the YT BS idiot's out there are saying. That was literally a 1-time thing where all the stars just perfectly aligned in a crazy rare 1-off event. 

So you gotta wrap your head around what IS todays reality, and where it's all going. Were now at the start of a different 40yr cycle. 

Investing is now about INVESTING. Buying cash-flow is NOT investing, it isn't, that is business purchasing, Merger & Acquisitions, NOT investing. 

INVESTING is buying Tesla at $225 because have reason to believe it's going too $325 in a year or two or whatever. To put it in a very simplified terms. 

7 yrs ago, a person could have woke up after a 3 day Vegas bender, casually scrolled the MLS on there phone and randomly picked a property with the 4 working brain cells, and probably come out ok. That is NOT normal. That was CRAZY easy of a market.

Today, going forward, it's back to normal. Which means it's gonna take work, serious work, serious intelligence, focus, knowledge, insight, strategy. In short, back to a professional market. 

Kind of like the stock market. After it fell so hard, any idiot could buy almost anything and it made $. Was it because that idiot was oh-so right? No, it was because of the unique situation right. 

Today, now it's wicked hard, complicated, technical and requires a highly skilled and experienced pro to consistently make $ on wall street right. 

Yeah, it's just the fact that the uber-easy market is gone-baby-GONE.

So the answer to it all is really simple once one understands the reality of it, you either; 

- (A) Hire a skilled Pro 

- (B) Become a skilled Pro

- (C) Spend rest of eternity starring in the rear view mirror or trying to put square peg's in round holes

- (D) Give up, walk away, quit......   

hard to find cash flow in decent areas unfortunately. There are good areas in Cincinnati that will be at 5, 6% ROI, but most people are looking for 10%+ because I guess that is what a video from 3 years ago told them. I always tell people, anything that has a 10%+ Coc ROI probably isn't in a great area. This can defer depending on sellers and their motivation, but those are few and far between. When I buy property, I go in good areas and expect it not to make cash flow for a year or 2. I want to be in good areas where I can see a solid future, or an area that has proven itself for years. So up and coming, as well as family friendly are my targets. Being in a good area will bring you better tenants, and tenants are everything. I would much rather negative cash flow with a great tenant, than positive cash flow with a bad one, because that bad one will eat your money up without thinking about it leaving you worse off. I could go on, just what I do and I think is the smarter route to go

Hey John! 

I recommend reaching out to real estate agents or wholesalers who specialize in off market deals and can provide detailed estimates of key financial metrics. Additionally, connecting with local investors in your area can be incredibly valuable. Hearing firsthand experiences may offer insights and guidance that can help you navigate your own investment journey more effectively. Best of luck!

Start looking off market and maybe adding some creative financing to your toolbox can help when you come across those potential deals.

@John Russo

The Real Estate Crash of 2008-2010 caused real estate prices to crash across the country - but didn't affect rent amounts. This caused a historically unique opportunity for investors - they could buy Class A properties and immediately cashflow when renting them out.

This couldn't last forever, and it didn't, as excited new investors drove up prices.

Eventually, Class A property values increased to the point that even increasing rents didn't allow them to cashflow upon purchase.

So, the flood of new investors switched to buying Class B properties.

COVID created a chaotic spike in both the sale & rental markets, attracting even more new real estate investors. According to CoreLogic, in December of 2023, almost 30% of home sales were to investors!

Investment also spiked in Class A Short-Term Rentals (STR) and investors started paying higher and higher prices based upon anticipated STR rental rates, that exceeded sustainability based upon Long-Term Rental rates (LTR).

Now we're seeing investors pouring money into buying Class C rentals - but, many are getting burned.

In our experience & opinion, the main determinant of property Class is not location or even property condition, those are #2 and #3. The #1 determinant is the Tenant Pool.

If you don't believe us, try putting several Class D tenants in Class A apartment buildings and watch what happens. Or try the reverse - rehab a property to Class A standards in a Class D neighborhood and try to get a Class A or B tenant to rent it.

Unfortunately, many newbie real estate investors are jumping into buying affordable Class C rentals - expecting Class A results.

In our opinion, Class C tenants have FICO scores from 560 to 620 - where their chance of default/nonpayment is 15-22%. See the chart from Fair Isaac Company (FICO) below:

Source: Fair Isaac Company

According to this chart, investors should use corresponding vacancy + tenant-nonperformance factors of approximately 5% for Class A rentals, 10% for Class B and 20% for Class C.

To address Class C payment challenges, many industry "experts" are now selling programs to newbie investors about how Section 8 tenants are the cure. If only it was that easy. Yes, the government pays the Section 8 rent timely, but more and more tenants are having to pay a portion of their rent. Then there are the challenges with Section 8 tenants paying utilities and taking care of their rental property.

Investors should fully understand that Section 8 is not a cure-all for Class C & D tenant challenges, it's just trading one set of problems for another.

We see too many investors not doing enough research to fully understand all this and making naïve investing decisions.

Hey John, welcome to BP — totally get where you're coming from. A lot of new investors are hitting that same wall right now with high interest rates and rising prices making it tough to find properties that cash flow, especially just using Zillow or Redfin. It's not that you're doing anything wrong — the truth is that most MLS deals in today's market don't cash flow right out of the gate unless you're targeting the right markets, getting creative, or digging off-market.

One market you might want to consider is Columbus, Ohio. I moved here from Portland in 2020 and now own 10+ rentals, and I’ve helped a lot of out-of-state investors find solid long-term rentals here that still hit the 1% rule. Columbus is landlord-friendly, still relatively affordable (you can find good deals in the $130K–$180K range), and it’s growing fast with massive development from Intel, Google, Amazon, Honda, and more. It’s one of those rare spots where you can still cash flow and ride the appreciation wave.

If you're only looking on-market, the best deals often go quick — or they need a little work to bring them to cash flow levels. That's where off-market deals, agent networks, and direct-to-seller strategies come in. You can also look into value-add deals where rents are under market or where a light rehab can boost cash flow. Another tip: connect with investor-friendly agents who work with BRRRR or out-of-state clients — they often have leads before they hit the MLS.

You're not alone — this market is tougher, but there’s still opportunity out there with the right approach. Happy to connect and answer any questions you have!

@John Russo

I agree with the other comments about it being difficult to cash flow. You don't mention where you're located. Where are you looking for these long-term rentals for $200k-$300k? In your local area or within a 2 to 3 hour drive?

I would suggest NOT to buy out of state/unknown markets for sub $200k properties. I've posted about this many times. Any "cash flow on paper" will be eaten up by repairs, capital expenses and potential tenant issues. One of these days I'll add up the all money I've put in on these Class C type properties - so far I'm out $70,000+ with uncertainty about appreciation (I have a lot of passive activity losses on my tax returns so that's the only bright side). 

I've talked to recent California investors who are buying high quality properties in appreciating markets, some are ok with some negative cash flow.  To reduce negative cash flow: rent by the room (called co-living by some people), medium term rentals, STRs, new builds where the builder will offer a lower interest rate. 

I wouldn't focus so much on cash flow but look at the overall big picture: economic growth of the area, rents increasing, appreciation, property tax increases reasonable or extremely high, insurance costs skyrocketing in those areas (or worse not being able to get insurance) and other factors. 

@John Russo
What market are you based in and looking? If you are just relying on Zillow try and network with agents to get more deal flow of off-market opportunities. If that still doesn't yield any results, then I would look at investing out of state

Hey @John Russo

Welcome to Bigger Pockets! What markets are you taking a look at? I'm an investor-focused Realtor based in Memphis, TN and we regularly see properties that are meeting the 1% Rule or above and producing positive cash flow. You may be in a market with too high of an entry point to rent ratio, and may want to redirect your attention to markets like Memphis if you're focused on cash flow. 

Happy to dive further into this with you. Best of luck!