How much cash flow could one get with $150k starting capital?

[James Z.]

One of my friends who has had to listen to my incessant ranting about REI had a question for me the other day, and I felt sheepish that I had no idea how to answer him. My plans are largely centered around SFH buy and hold, long-term investing, and my knowledge ends there. He is well-to-do and has money saved up, and was curious about how much cash flow he could get with it in the short-term.

So, my question is this: if you had $150k in capital to blow, were just starting out, and you were mostly concerned about getting the max amount of cash flow in the near future (and if possible setting yourself up to get some more long-term benefits) what would you do? 

Two extra criteria.....he lives in the Washington DC metro area, so things are pricey (but probably willing to look farther out) and seems averse to house flipping.

[Jon Holdman]

@Joe Villeneuve you're claiming that ALL Expenses, ALL vacancy and ALL capital amount to $330 out of $975 of rent.  That's 33%.  You may well have seen those sort of numbers.  Two very large datasets that have been posted here in the past that covered hundreds of thousands of units do not support that number.  That number is unrealistically low.  That's the kind of number turnkey sellers use to sucker in naive investors who don't know better.  Building a business based on that number will result in failure when the cows really come home and those big capital items start hitting.  If you're building a portfolio of properties you WILL be replacing roofs, appliances, furnaces, and sewer lines on an ongoing basis.  You WILL have tenants that wreck the place.  You will have lengthy and expensive evictions.  

First time I every shot craps I started with $200 and walked away with a purple, $500 chip.  But I'm not naive enough to think that's a normal outcome.

So, @James Z. use whatever assumptions you want when making investments. I personally do not use a number like Joe's unless I'm willing to manage the property myself and willing to contribute that labor for free. No matter what assumptions you make up front reality will be whatever it will be. If you have just a few properties you may get lucky like I did at that craps table and have very low expenses. Or you might have a really big expense like I did on one of my properties last year where I spent over 50% of the year's rent just replacing a sewer line. This business is chock full of property listings that say "this cash flows" when all the seller or their agent really means is "if you put 20% down and get a 30 year fixed rate loan the PITI will be less than the rent."