Finding a property that cashflows

[Nikolas Komatina]

I have been trying to find a property that cash flows. The market that I am looking at has an average price of $360,000 with an average rent of $2,200 which does not have a very good rent to house price ratio (2% rule) . I have a loan pre qualified for $300,000 with 10% down with 5.7% interest rate. With finding a cash flow property in this market I would have to find a house for $150,000 and renting it out for $2,200 (including all fees and Mortgage). Or putting a bigger down payment and still finding a deal fairly below the the average housing cost in this market. I have contacted realtors to help me find a property but no success yet. I am also looking at other ways that I can purchase a property for a lower cost such as looking at forecloses and driving for dollars. Is there other creative methods to look at this, maybe BRRR?

[Nathan Grabau]

@Nikolas Komatina changing the numbers on paper before you get the deal will not change the outcome of the deal. I would hold your numbers where they are. If you need cashflow today, and cannot afford being in the red initially from a monthly cashflow perspective, there are other markets that do cashflow. On the extreme end of the spectrum you have places like Flint or Cincinnati that yield 20%+ cash on cash returns. I have avoided these markets because I think their long term population losses will continue to lead to a shrinking tenant pool and below average rent/ value appreciation. It is still possible in some other mid west, ag(ish) based areas, like Ames, Iowa(where I am invested) to get cashflow on deals day 1, but not have areas that's population is decreasing. If you want to contact me, I can put you in touch with my realtor and property manager in Ames. I have been able to get deals done for under 30k down that cashflow about 8%+ currently.