Curious What Everyone's Cash Flow Is

[Wade G.]

My average CF on a 3/2/2 SFH in southeast Harris County worth about 160k - 190k, at 75% LTV, is about $300 month. That $300 month is after PITI only, actual CF after repairs, maintenance, PITI, and vacancies is about $100 month. So for me that's about $100 a month per house that I could spend on personal living expenses if I wanted to. I have been a member of LU off and on for many years but I have never experienced the $500 - $700 per month of spendable CF that they proclaim on a newly purchased properties at 75% LTV. I ask because I am refinancing a couple of my properties and I'm trying to figure out where to invest the proceeds. Buying more houses with $100 month CF does not excite me too much. Buying properties with $500 - $700 month real actual CF would excite me. So I'm asking other Houston area investors what your typical CF is?

[Chris Hopper]

@Wade G. For one, you're looking at the higher end of the rental market with the 190K ARV's. Most of the $500+ CF can easily be obtained with properties in the 125K ARV range. Buying properties for 50-75K, putting another 20-30K into them and renting for $1200-1400. Easily found in Texas City, Dickinson, Baytown, Sunnyside, etc. Now I do own several 200K ARV rentals, but I strictly do Sec 8 and mine CF $350-400. Personally I don't like the lower end stuff. I think the lower priced stuff will have better CF but less appreciation. You would have to run numbers to see what works best for you. Also have to take into consideration what you're doing for repairs/maintenance. Mine is setup different than probably most investors, but it works for me.

The typical 200K house around Houston area will appreciate 4-6% (quite a bit higher in some areas), whereas lower end properties in less desirable (but still good markets) maybe 2-3%.  To me, the better home with better appreciation is worth a little less CF - just have to buy more!  Some investors are strictly CF and don't really care about appreciation.  I also look at it from a refinancing standpoint, and some of the lower end stuff won't qualify as a lot of lenders have a 75-90K min loan amount.