Why Does It Cashflow?

[Dustin T]

The general consensus in my area is that if you only have to negatively feed your investment by a couple hundred per month, you're doing good. Folks out here regularly will finance a rental at $1200, 1400, or more per month, and rent it out for $800-$1100 feeling pretty good. If they break even, they feel like they hit the jackpot!

When I tell them they should look for properties that cashflow they get angry and defensive and tell me that those properties are "cheap for a reason". Well I've been to Texas and see properties in low crime areas where salaries are as good as in my area, and the property is 1/2 price.

within a 2 hr drive of my house, I found another one that would rent for $650/month. I can afford to put 20% down (it's a $45,000 house) easily and even with a 10% property management company fee my monthly mortgage+fee only is about $325. Mean's i'm cash flowing just over $300/month before maintenance.

So what am I missing from this equation? Before I jump in head first, what should I be looking for? House was recently fixed up quite a bit, good windows, floors, counters, etc. I need to check the roof and foundation but most of the houses in this particular region that I'm looking at will cash flow, yet the local investors I talk to won't even consider it. why? Am I missing something?