Why properties more than 300k doesn’t make cash flow?

[Behzad Sharifi]

I looked up a lot of properties through Zillow, and used the bigger pockets calculator to analyze it. The results surprised me, so basically properties which are expensive than 300k are not making cash flow. And the other properties which make cash flow are in a bad environment or a bad neighborhood. So any advice or suggestions? 

[Dan H.]

Quote from @Behzad Sharifi:

ARBNB AND VRBOS are good, but I need a long term rental agreement to keep up with the expenses and the principal.

In most markets, make sure the property works as an LTR. this is because STRs are under attack from multiple directions. Quotas, bans outrageous taxes. OTAs that continuously become less owner friendly. AirBnB is advocating owners pick up the fees that are currently paid by the guests. Even some vacation markets are implementing outrageous STR taxes/fees.

STR can make more money, but requires more effort and has the risks from the various attackers. Best to be sure any purchase can work as an LTR.

by the way lowering LTV is purchasing cash flow at too high a price as the difference between 80% LTV and 70% LTV reduces the return significantly. In terms of return, in most markets you are better off having the negative cash flow than lowering the LTV to obtain cash flow. At 80% LTV, 10% appreciation results in 50% return from appreciation. At 70% LTV, the same 10% appreciation results in 33% return from appreciation.

Good luck