Thanks for the replies guys
@Lynn McGeein I have been keeping an eye out for potential properties and running the numbers as much as I can, if anything just to get a feel for it. They're not exactly hidden gems, right now I'm just looking on the MLS and driving for dollars fairly close to my current location. No mailing lists or funneling people to a website. Anyways, I mentioned some of the deals I had found and he pretty much said that if they're foreclosed or distressed then there's a reason and that the will be money pits, even if the numbers work out with the 50% rule.
@Account Closed I'll try to cover your questions in the same order...
Worthwhile to me means giving me a return greater than another investment that I can get for equal or even less work. If I'm getting 5% return on my down payment I might as well throw that money in a mutual fund and not even worry about managing tenants. Time is a much an asset to me as money.
Cashflow, as I understand from all the articles I've read here, is the NOI-OE-Mortgage. What's left over is my cashflow. Though I understand that this can be taxed for even less value if I want to just pocket this.
I'm looking for immediate cashflow. I really don't want to assume that the rents will raise 2-3% every year, even if statistics are currently showing that. As long as I have cashflow from the beginning and the area is not declining then it's good.
I didn't know cashflow and profit were different. But from looking it up just now it seems that cashflow is profit with regards to a timeline. Rather than just saying revenue-expenses=profit, it takes into account the fact that the expenses may need to be paid before there is any profit so your cashflow might be negative at first. Which brings me back to your previous questions. I guess you meant am I willing to be in the "red" for 5-10 years(10-20% cash-on-cash return) before I will actually make a "profit" off of this house. And the answer to that is yes, but I want to make sure every month more money is not coming out of my pocket than what is going in.
Which makes me think your last question is asking whether I will take more cashflow in the beginning by neglecting maintenance only to have to pay big bills later on. If this is what your asking then definitely not. Maintenance is included in my expenses calculation. If it's only "cashflowing" when I don't include the cost of these repairs and replacements then it's not a worthwhile investment. Even though equity is building up I don't want to be paying out of pocket for monthly expenses. Otherwise I would just buy a house for myself and build equity that way.
Thanks for the food for thought. I really learned something just forcing myself to truly think about these questions.
