A lot of negative cash flowing properties

[Stephen Brown]

Hello All,
I'm just getting started with Real Estate and now that I'm analyzing properties I'm finding it very hard to find positive cash flowing properties where I live. Here is just one example of a property that I found that barely cash flows. I feel like property taxes are just way too high. I even analyzed a property in a neighboring city that is known for high cash flow (Toledo, OH) but again the taxes somewhat killed the return. So I'm wondering if I am doing something wrong. Here are some numbers on a property I analyzed recently, I was able to tweak numbers around a bit, but in reality this is the best property I have found in my area, which is more expensive.

Did  anyone ever have any mistakes when analyzing properties that I may be making or do I just need to be more patient?

Repairs and Maintenance	7.7%
Property Management Fees	11.1%
Property Taxes	22.6%
Insurance	5.4%
Vacancy rate	10%
Monthly Rent	1200
Monthly Payment (4.75% @ 30 years)	399
Monthly Cash Flow	63
Monthly NOI	462
CoC Return	1.49%

[Corby Goade]

How do we know this isn't a good deal? People on this forum are so quick to make assumptions based on limited information. What if there is $35k in equity from day one- would that be a good deal? What if the appreciation in this market is 25% year over year- would that be a good deal?

My point is- good deals are relative to the market and the buyer's risk tolerance. I have clients that pay $500k cash for SFR that will rent for $2500/month and appreciate at 15% per year and they kick back and don't get a PM call for the first 8 years. I have other investors that agonize over $50 repairs in an entry level rental.

If your area is appreciating at a decent rate, chances are you are going to have to sacrifice SOME cash flow to enjoy that appreciation. I have no idea if this is a good deal, but in markets where appreciation is reliable, there are plenty of experiences investors who will worry much less about cash flow in order to sit on an appreciating asset and leverage against it in a year or two.