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Updated about 2 years ago,
Advice on searching for/acquiring a cash flowing rental property
So a little bit about my background before I dive in: I previously have owned rental properties before (back in 2018 - 2019). Those properties we all bought in cash (no leverage) they were lower end properties that cash flowed and already had tenants. My business partner bought me out near the end of 2019 or so and we parted ways amicably. Then Covid happened, and I wasn't involved in the space for a few years. My main job is working in tech as a project manager. I have capital, but most of it is already fully invested at this point. The area we had been buying in has since appreciated and the properties no longer cash flow, he has since exited real estate altogether (and moved out of state as well).
I'm getting "re"-started now again. I have my LLC set up, bank account, liability insurance, etc. and I've been doing research and analyzing properties. I want cash flow, preferably through SFH. But it seems impossible to find anything at the moment. Which means I'm probably either A. Not searching the right way, or B. Not searching in the right markets. So I'm open to advice on what to change. Below, is what I have been doing so far over the past few weeks:
I live in Raleigh, and I know it's extremely unlikely I'm going to find any kind of cash flowing LTR properties here (I'm not open whatsoever to STR or MTR that is a non-starter for me). For me, appreciation would be a nice inadvertent bonus, but I care far more about cash flow and am prioritizing that. So I've only been looking outside of the Raleigh area, trying to stay in state for now, and looking in Greensboro, Fayetteville, Rocky Mount, Winston-Salem, and Greenville. I've been primarily looking through Zillow, REIA, and realtors so far.
I've been debating about "driving for dollars" on the weekends an hour or two outside of Raleigh, but wouldn't be able to do it during the week because of work. Price wise I want to aim for properties that are below 290K and that could still net me $200 /mo with no more than 10% down. But so far, those criteria seem to be unrealistic. I have the money to put more down, but I'm trying hard not to in order to preserve the money for expenses or more down payments for other properties.
I'm open to changing my searching strategy or property type (going to condos or multifamily instead of SFH, etc.) or partnering if I need to after vetting the potential partner(s). Not sure what else I should be considering changing at this point. Open to suggestions though if anyone has advice.
In terms of what the "numbers" are: I typically assume:
5% for maintenance and repairs
5% for vacancy (sometimes more in certain markets)
5% for capital expenses
8% for property management
Then additional amounts for whatever rates are for property taxes, insurance, HOAs, etc.
Rental income I typically pull from either bigger pockets, Zillow, or from a local property management company's estimates, and from what similar properties are renting out for.