Are there still positive cash flow deals??

[Meir Preis]

For starters, this is my first BP post :)

I have been looking in the Greenville NC area and Eastern NC for an investment property that I would be renting out for LTR or MTRs. I have cash available for a down-payment and I am pre approved.  I am not looking for a property that would need substantial work. Thus far I am finding

-Even with the current rates houses are moving very quickly off the market and they are going for the asking price.

-The average monthly rental income, even from higher MTR amounts, is producing at best a minimal positive cash flow and a very poor CoC.

It seems that housing prices in the current market (mortgage and monthly costs) are exceeding what the going monthly rental rates are in many areas which translates into unimpressive cash flow.

Am I missing something? Thoughts?

[Arn Cenedella]

Quote from @Meir Preis:

For starters, this is my first BP post :)

I have been looking in the Greenville NC area and Eastern NC for an investment property that I would be renting out for LTR or MTRs. I have cash available for a down-payment and I am pre approved.  I am not looking for a property that would need substantial work. Thus far I am finding

-Even with the current rates houses are moving very quickly off the market and they are going for the asking price.

-The average monthly rental income, even from higher MTR amounts, is producing at best a minimal positive cash flow and a very poor CoC.

It seems that housing prices in the current market (mortgage and monthly costs) are exceeding what the going monthly rental rates are in many areas which translates into unimpressive cash flow.

Am I missing something? Thoughts?

 @Meir Preis

If I may offer my perspective. Do with it why you will. 

I am not a “cash flow is king” investor  

Pending one’s stage in life and career, I submit growing equity and increasing net worth should be the goal of most investors in their 30s and 40s - as they enter their prime income years. Presumably someone who has cash to buy investment real estate has a W2 income sufficient to cover their total monthly cost of living - their “job” pays for their lifestyle. So they don’t need cash flow to live off of. From folks in that position, I submit it’s better to invest for capital growth. Properties should pay for themselves with some cash flow left over to cover unexpected expenses. But the focus in my should opinion should be on long term capital growth.  

Question: Who will be able to generate more cash flow when they want and need it?

Investor A with $1M of investible assets

Or

Investor B with $3M if investible assets

The answer is obvious, it’s investor B. 

To move to the specific cash flow question:

I see countless investors talking about buying a cash flow property. I see countless brokers and owners trying to sell property by indicating “it’s a cash flow property”. 

If I may offer another perspective on:

Does the property cash flow?

It’s an incomplete question with no answer. 
I believe an additional layer of detail and sophistication is required. 

I submit:

Every property will cash flow if you buy with all cash. Right?

So the better question the more informative question is:

What size cash down payment do I need to make so that the property cash flows?

Does an investor need to put 20% down or 30% or 50% down to cash flow?

That’s the better question. 

Any question or statement about cash flow only has meaning when connected to the amount of cash required to buy it. 

And yes in todays market with todays debt costs, I suspect most SFRs will require 30% to 40% down to cash flow. In my opinion you won’t find cash flow with 20% down unless the property and location are horrible. 

You are on the right track stating to look at real estate investing. It’s the best way in my opinion to obtain financial security and wealth. Aim for line drive base hits not grand slams over 10 years and you will be well on your way to get there.