Analyzing & Buying Rentals

General Landlording & Rental Properties
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Analyzing & Buying Rentals

Mandi Baxter
Flipper/Rehabber · ID · Member since 2022 · 3 posts · 0 votes

So 2 questions about rentals:

1st, I haven’t purchased any rentals yet but I have had a few come up to analyze and when I analyze them they always come up as negative cash flow. Am I doing something wrong or is it just part of that finding a lot of deals that don’t work out before you find a good one?


2nd, I have only purchased SFH but I am looking into multifamily and I heard about Crexi and found a lot more properties than what's on MLS. I also recently heard them mention on the podcast that when you get into larger multifamily you don't have a buyers agent. I know this is kind of big question but how does that process work? Any references for where to learn more about the process?

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Billy Daniel
Rental Property Investor · Russellville, AR · Member since 2014 · 688 posts · 509 votes
4y

Cash flowing rentals are a struggle to find in the current market (some markets more than others).  As interest rates rise, they will become even more difficult to find.  Save for a large down payment and search for properties in need of some work.  

Realtors will post their properties for sale where their customers are looking.  Commercial agents will post on things like Crexi and Loopnet because thats where people looking to buy large properties are looking.  They wont bother with small local MLSs because that limits their visibility.

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  • Billy Daniel
    Rental Property Investor · Russellville, AR · Member since 2014 · 688 posts · 509 votes
    4y

    Cash flowing rentals are a struggle to find in the current market (some markets more than others).  As interest rates rise, they will become even more difficult to find.  Save for a large down payment and search for properties in need of some work.  

    Realtors will post their properties for sale where their customers are looking.  Commercial agents will post on things like Crexi and Loopnet because thats where people looking to buy large properties are looking.  They wont bother with small local MLSs because that limits their visibility.

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Mandi Baxter:

    Property values have skyrocketed in the last two years. The higher the purchase price, the harder it is to cashflow. It may take several years for rent rates and sales prices to balance out so properties cashflow again. Keep digging or look in a different market.


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  • Robin SimonBusiness Member
    Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
    4y

    Its definitely harder to find cash flowing deals right now BUT

    remember if you finance with a 30-year fixed rate debt, then your monthly payment is locked in for 30 years while rents are likely to continue to rise every year.  So you might have negative cash flow the first couple of years but if you are planning to hold for the long-term, it can be very cash-flow positive for the majority of your investment period

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  • Kathleen McDowell
    Realtor · Scottsdale, AZ · Member since 2018 · 65 posts · 47 votes
    4y

    Cash flowing properties for Y1 are hard to find. Remember to look at a longer horizon given you will likely hold for the long term. Be sure to put in a realistic forecast for both rent increase over time and property value as well.  You'll likely find that the cash flow improves over time as rent increases and your payment stays the same. The first year or two may be breakeven, but in the end someone else is still paying off your mortgage, which is not a bad thing!

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  • Danny Lambert
    Rental Property Investor · Washington, D.C. · Member since 2021 · 69 posts · 31 votes
    4y

    I agree with @Billy Daniel that appreciation makes cash-flowing deals hard to find, and forcing appreciation or other strategies that are not turn key may be necessary. Also remember that most "opportunities" at any time, on the MLS or otherwise, are bad deals.

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  • Aj Parikh
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    4y

    Hi Mandi! I learned my real estate deal analysis on single family homes through the Brandon turner youtube video on analyzing deals. 

    Multi family investing is very relationship based and its very unorganized in that sense. 

    Feel free to connect and we can discuss further on investing in multi family and analyzing deals. 

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