Finding Cash Flow Properties!

[Omayra C.]

Hello,

I am looking to purchase small multifamily properties from 4 to 12 units. Does anyone know which cities have the best cash flow markets? I am in Orlando Florida but I cannot find any good cash flow properties here. 

[Dan H.]

Quote from @Cody L.:

Quote from @Amara Berg:

If you are looking for just a return I would start by determining what return you would need. Think of your cash flow monthly and also how it relates to what you've invested (IE your cash on cash), as well as the cap rate. Each market is different. I'm in San Diego where the cap rates on Multi range from 3-5%. I read a report earlier on Fort Lauderdale that was published by Marcus and Millichap. They publish great information about what markets are thriving, emerging, declining, and so forth. They also do a good job of outlining the net absorption rates. Also, I would hire a good real estate agent to find you off-market deals. I wish you the best! Amara

 Funny you mention low San Diego caps.  Someone sent me a fourplex (FOURPLEX) that was $3.2m...  I think each unit was a 700sf 2/1.  How in the @#)$(* &  would someone cash flow with a 700sf unit when they're paying $800k   That's insane.

To put that in perspective, I just bought a beautiful historic property in the museum district of Houston.  A+ location (by our best parks, med center, museums, etc).  The units rent for about $900/month (should be $1000/month but whatever).   I paid $78k/unit.   They'll cash flow.  The property is great.  Tons of land value.  etc.   I just can't imagine buying at the prices being asked in San Diego.   Makes me wonder, like in the case of the fourplex I saw today -- who the F is paying that much (and why?)

 I do not disagree with your assessment but wanted to seriously answer the question posed. 

Rentometer shows average 3/2 SFH rent in San Diego rose over $800/month YOY and Redfin shows YOY appreciation was 11%. So it is someone that is expecting this to continue.

Assuming it does and it is purchased at 75% LTV ($800k plus closing costs), the property appreciates $350k in the first year (great return on $800k after just one year) and if we use half of the 3/2 SFR rent increase because 2/1 and not SFH we would get $1200/month rent increase (quickly improving the cash flow situation).

Logic tells us it cannot continue like this, but 60 years of history tells us that over the long haul it will have outstanding appreciation and rent growth.  I do not understand how it can continue!

do we have a house of cards about to come crashing down?   I have not purchased since Dec 2021 (purchased $4m that month) because I was being cautious and the cash flow is not there at these rates.  However, hindsight shows I would have done outstanding buying a year ago.  Am I being too cautious?   so far time has indicated I have been. It will require more time to know for sure.  

Take care