Possible to get $3,000/month cash flow with 300k?

[Doug Shapiro]

Hello All,

I'm considering doing a 1031 exchange and need some advice.  I own a rental property with a market value of at least 700k, and after selling would have 300k in cash.  Are there any real estate markets out there where I can invest 300k (property(s) value would have to be at least 700k) and expect to get $3,000/month in cash flow?  Also, I don't want to do any major remodeling work. 

Thanks!

[Timothy M.]

@Doug Shapiro

Someone else on here said it best like a week or two ago.  Real estate involves, at best, sixth grade math: addition, subtraction, and sometimes long division.  

You're looking to return 36k on a 300k investment - this pencils out to a 12% return on your investment.  You've also stated that you want relatively-turnkey (that is how I interpret the phrase "I don't want to do any major remodeling work").  I don't think that a 12% cash-on-cash return deal would be particularly difficult in today's market, provided that you are focusing on rental returns and not, say, a speculative play in a high-appreciation, low-return market like San Fran, DC, or NY.  If I were you and had those goals, I'd take your $300k, lever up a bit, and buy some B-C grade rentals or a larger complex in any number of Midwestern or rust-belt markets (Indianapolis, Cincinnati, Pittsburgh, or Detroit come to mind as off-the-cuff options).

I think you'll find that 12% CoC is eminently reasonable as a goal and won't require you to go off the rails with something super risky. Best of luck in 2019!!

(source: have some [arbitrarily graded] B-to-C grade rentals in similar markets and am achieving long-term returns right around where you're looking)