Cash Flow Positive Properties

[Christian Rojmar]

Hi everyone!

Finished reading rich dad poor dad for the second time a little while ago and have since then been plowing through real estate books as much as time allows, including "Rental Property Investing" which brought me to this forum! It is great to meet everyone. I live in Austin, Tx and have a goal of accumulating 20+ single family rentals over the next 10-15 years in the Austin area.

With that said, the problem I notice right of the bat as I have begun analyzing real estate deals is that whether I look at properties that are in foreclosure, been on the market for months, pre-forclosure, REOs, or Craigslist, the pricing on such properties (which is far below current "market rates" in Austin) are not even close to allow cash flow to be positive. I have expanded my location with no improvement in cash flow. Are you guys experiencing similar difficulty in today's market (particularly in Austin)? I am far from discouraged yet as I have just begun this journey and the fact that we are what may very likely be a peak in the economy before a pullback or recession. Do you guys just play the numbers game and make offers that allow cash flow goals to be met on a ton of potential listings and wait for someone desperate to accept?

Any thoughts on where to go from here? I have begun shifting my focus to building a network - realtor, lawyers, accountants, lenders, property managers, and hopefully other investors so I have that in place once the market provides better opportunities. But am I maybe just overlooking something in regard to finding cash flow positive properties?

Appreciate any input and again, great to meet everyone!

[David Ivy]

@Christian Rojmar

Yes, your overall impression of the Austin metro area market is accurate. We’ve had a high demand, low inventory housing market with year-over-year price appreciation over roughly the past eight years. Here’s a chart of the median sales price of a single-family home in the City of Austin over the past 10 years:

Rents, meanwhile, have lagged behind, especially in the previous 3-4 years. Here’s a chart of the median monthly rent of a single-family home in the City of Austin over the past 10 years:

The story is basically the same for Austin’s suburbs, just with lower median sales and rent amounts. Unemployment in the Austin area is below 3% and most home owners are sitting on decent equity. The overall RE investment market in Austin is very saturated at this point in the market cycle.

Note, however, that rents do appear to be finally moving upward in the Austin area in 2019. Look at the year over year difference from 2018 so far for median single-family rental rates in the City of Austin: