Cashflow has been a tough find in the Phoenix market for a while now. The crazy amount of appreciation combined with interest rates rising that seem to be steadily rising since the summer of 2022 making it very difficult to find any residential deals that make sense from a cashflow perspective. Yet almost daily I speak with an investor or client that is looking to find the elusive cashflow deal. I commonly get asked what is the best way to find a cashflow deal? Should I get set up with wholesalers, should I look Pre Foreclosure route?

This chase for the hard to find cashflow inevitably turns in to what management strategy to utilize that would turn buying a bad deal to a cashflow positive deal. Okay this is probably a harsh and unfair comparison, but when I join calls of a large investing group that I am part of founded locally in Phoenix it reminds me of a problem I had with a property I own in E Mesa. I own and manage this property as 3 separate Airbnb units. They are sharing walls but are individual units. I got a call no Landlord is excited to take, that there were roaches and more than one that the guest found throughout their stay. We vacated the unit and begin treatment which seemed to be working great at first. This is until I got a call from the adjoining unit a few days later saying that they now had several unwanted guest that I assume that had made their way over following the treatment of unit 1. This went on for another few weeks with the unwanted guest going from unit to unit. The pest treatment supervisor then told me that we were going to have to vacate all three of the units for at least a couple of weeks to thoroughly all parts of the triplex at the same time. See German roaches go from one home until it is uninhabitable then will go through the ducts and other paths to anywhere they can find a new home.

This is what it feels like for myself and what I see with other large investment groups. Airbnb is over saturated, let's try Furnished Finder. Furnish Finder makes great returns and then everyone else gets in, let's try the Roomster app and on and on. A never ending game of finding the latest rental strategy that will make my bad deal cashflow. It sounds like I am bashing but I am speaking about myself as well, I've tried everything with some great successes and some a waste of time and effort.

I am in no way advocating not to get into investing or saying that there are no cashflow deals to be found anywhere. What I believe investors especially new to Real Estate should focus on is to go back to old school tactics and strategies. Many of the investors I know that have been in the game a while believe in buying properties that cashflow or at least break even as a traditional rental. This means putting a much larger amount down and having a safe reserve. I know this is not exciting and leverage is one of the key components of wealth building through Real Estate but I do not believe now is the time to be heavy leveraged. These properties will reward you greatly in the future while not stressing you out today and saving you from having to find the next crazy rental platform to hit the market.

Phoenix, Arizona

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