What does it take for you to cash flow $1K/month?

[Mark K.]

Hello,

I’d like to get an idea of what it takes for you to cash flow $1K/month. I am a newbie and in the midst of ironing out my short and long term plan/goals. I believe that if I can cash flow $3K/month I can quit my job and get by (barely). That is assuming I am living off my cash flow.  I will have reserves already lined up for my properties if I quit my job.

While I understand there are so many variables in real estate, I just want to get real world examples of what $1K/month cash flow looks like. Is it from SFH, multi-family, commercial? I would appreciate if you could follow the template below. It will give me and I'm sure many others a benchmark in which to start.

Location:
Type of property:
Monthly rent:
Expenses:
Mortgage:

PS - I understand you might have to combine several properties to get $1K/month cash flow, please write that down too!

[J Scott]

Originally posted by @Mark K.:

Thanks, so you are saying, it makes more sense to buy a more expensive property with $80-120K down so I could cash flow $1K/month on one property?  As opposed to buying smaller properties with lower down payments and therefore smaller cash flow?

You can make arguments both ways...

The argument for doing that is that you'll have less work to do -- you only have to find and manage (or oversee the manager of) one house.  Certainly easier than finding and managing several properties.

The arguments against are:

-  You have higher risk with one unit than with multiple units, as you can't average out your income and expenses.  If you have one 3-month vacancy and you only own a single unit, that's $0 income for three months.  If you own 4 units and one has a 3-month vacancy, you're still getting 75% of your income during that three months (from the other units).

-  It's harder to find higher-priced deals that return the same as lower priced deals.  You can probably find rentals that will return 10-15% in the $100K range in many parts of the country, but you're unlikely to find $500K rentals that will return 10-15%.  Rent doesn't generally scale linearly with market values.