New to REI - Analyzing cash flow & other basic questions

[Brad Crumpton]

New guy here - 34 years old and I've been working as a Mechanical Engineer for 12 years. Plan to continue for another 20-ish. Just now starting to learn about REI and have been trying for a year or so to just look around and learn. I live just east of Dallas on I-30 and I'd like to keep rentals in that area (Rockwall. Royse City, Greenville). Just found this forum and I'm reading the beginners guide.

Mine & my wife's goals are to build up around 8-12 (potentially up to 15 or so) rental properties that would provide good passive income when we retire.  Not trying to become mulit-millionaires or anything like that.  Just need them paid off within 20 years

Long story short - I have 3 primary questions:

1 - How do you go about analyzing cash flow on properties with prices so high right now? For pretty much anything, we'd be putting 20% down and financing the rest over 15 years. If you look on MLS, there is very little that shows you could get any positive cash flow (much less something really enticing)? Or I'm just wondering if I'd be better off waiting for the market to come down before buying in at all?

2 - How do you decide what market to get into?  Low-end stuff can usually show a little cash flow, but it's higher risk.  Mid-level units ($100k-$175k) are really tough to show any cash flow on, but renters are out there in this price range I think.  

3 - How are some folks finding deals? One listing that showed up on facebook last week was for a house for $37k in Greenville that they had bought for $19k the month before. Not even sure how to find out about wholesale/auction/etc. type options that provide entry options that would be much more profitable than what shows up on MLS.

Appreciate all the help in advance.  Thanks!

[Poem Turner]

Hi @Brad Crumpton. And welcome! You've hit the nail on the head. 

            "Finding anything low-end at an attractive price right now is extremely difficult."

At almost any price point, but definitely the low-end, you'll be in competition with a lot of first time home buyers, and other investors who are possibly able to buy all-cash. Looking for a pre-MLS or off-market deal you drum up yourself may be a better strategy for you. Tell people what you're looking for. Pull a few phone numbers in your target neighborhoods and ask folks if they've considered selling; essentially a suggested FSBO situation. if you find it off-market you can still finance it conventionally, unlike a wholesale deal where you'd have to pay cash or hard money. Get in touch with a few wholesalers via your friend and offer a bird dog fee for contacts they make where there's not enough meat on the bone for them. Above all, patience; not a lot of low hanging fruit at the moment. Good luck!

Poem