Rental Rates =< Mortgage Rates

[Andrew Tran]

Hi all! I'm based in Houston, TX if that helps. Almost every house I look at has rental rates that would be equal to or less than what the monthly mortgage would be. How are you all navigating this market and finding rental properties that cash flow on a monthly basis?

[Kevin Sobilo]

@Andrew Tran, a deal isn't what's advertised its what YOU make out of it.

1. Experienced investors will often buy off market. That might be directly from a seller or a wholesaler or from some kind of auction.

2. When you look at listed prices off the MLS that is what they are ASKING! If you find a motivated seller in some kind of distress they may negotiate substantially lower.

3. You can buy a property and do something with it. You might convert a single into a duplex for example.

4. You might use different strategies to increase the income from the property. You might make it an AirBNB, or rent it by the room instead of to a single tenant, or rent the garage separately for added income.

5. You mention mortgages. The old saying is "You marry the property, but date the rate" meaning the property can be held a long time but you can refinance over and over. So, you might buy a property at today's rate and then in a couple years refinance at a lower interest rate lowering your payment and increasing your cash-flow.

There are many more things you might be able to do to "make a deal work", but its up to you to make the deal it isn't just what is advertised to you.