All Forum Posts by: Dan Schweit

Hey All. Need advice on how, or where to find properties that actually have cash flow. Im in CA, and even though rents are high, they are not comparable to what a mortgage payment with 20% down costs. Now I know digging for deals and finding a really good one will help the numbers, but I still don't see it being a good cash on cash return. Are any of you investing in markets across the country that have attainable returns for your upfront cash?? I believe there are markets out there that produce returns of 5-10%, but im not sure where. Hoping the community can help point me in the right direction.

In coastal So Cal there is initial cash flow vs Cash flow after a couple (in recent years) of ownership. In San Diego (the market I know best) average SFR rents recently increased $500/month in 3 years. This implies that cash flow has increased close to $500 on the average SFR. This implies that a SFR purchased 3 years ago that had a couple hundred dollars negative cash flow now has nearly $300/month positive cash flow.

To add to this positive cash flow, the SFR has appreciated significantly. Recent San Diego statistics had the average SFR appreciation at $152k for the previous 5 years.

Los Angeles historically produces near top of nation returns (case Shiller has it number 2 for this century). This return includes cash flow and market appreciation. If it only looked at cash flow at purchase, Los Angeles would not be #2 return but it looks at the cash flow over the long term (in this case 18 years).

Are you investing for the ling term or the short term? Can you handle negative cash flow until rent appreciation creates positive cash flow.

Good luck

@Dan Heuschele Hey Dan. What you described is exactly what I am looking for actually. Im not even so concerned with cash flow, just trying to avoid the negative cash flow. If you look at my response to Marcus, im in it for the long term and playing the appreciation game. I like the BRRR method, or at least the option to, but looking at properties that will rent for $2,200 a month but have a monthly payment of $2,800 just doesnt make sense to me. I could handle $100-$200 negative a month if I thought the property had tremendous upside appreciation wise, but id like to find at least a breakeven.

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@Marcus Auerbach Thanks for the reply Marcus. I am realistically only looking to invest in real estate for appreciation. Obviously, cash flow would be fantastic but im looking for long term investments here and my main goal is simply to avoid negative cash flow. Im most concerned with funding my retirement with real estate. Im just using the 5-10% in my post cause I believe that is out there, but not my expectation. Over the last 15 years, ive bought and sold a few properties that I held for at least 5 years, no real cash flow, but at the end made great returns on my money. So, im really just trying to replicate that instead of funding my 401k.

Btw, I went to a panel at a local KW office a few months back and found it to be very insightful and informative. The "Keller Williams way" seems to be a solid business model and it seems like a leader in the industry.
Originally posted by @Marcus Auerbach:

@Dan Schweit I have family in San Diego and San Francsico and continue to be shocked looking at values. Even tough we had prices go up 7 consecutive years now, you can still buy quality properties in the Midewest, put 20% down and cash flow them well. There is a lot of fool's gold out there, deals that look great on paper, but bleed you slowly over time, so you have to make sure you understand what you are buying. Most of the midwest markets are very competitive and short on inventory, so deals will go very fast, often within a day. I get a lot of calls from out of state investors and most of them end nowhere; I think often the expectations are too high - while it's very possible and we close deals every week, you don't get deals on a silver platter, most of them don't look perfect when you first see them and often you have to "make" them into a deal, which requires work and the willingness to invest your time and energy on top of your capital. A lot depends also on your expectations, how hands on or hands off do you want to be, are you willing to plat this as a long term game or are you looking for quick returns. Sorry if I have more questions that answers, but feel free to reach out!

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@Andrew Angerer

Great question! I didn’t read all the responses, but I’m going to answer from personal experience. I have been there. I sort of still am. It’s ultimately analysis paralysis in my experience. I’ve bought rentals, which seem safer and less risky than flips. The plan B in flipping seems non existent, either calculate all variables correctly, or risk losing time and money. It was honestly easier for me to put $250k into a small franchise than actually pull the trigger on a flip, which in hindsight was a horrible decision.

Since you bring it up. Any tips on how to overcome the doubt?

Dan

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@Doug Peters thanks for the reply Doug, I will have to check this out. As we all well know, networking is a huge part of this business, or any business for that matter. I’d love to hear more details about what you have going on being we are both in the LA area.

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Hey all, really enjoy the community and the discussions and wanted to jump in. I have been a buy and hold rei for several years now but am very eager to jump into fix and flip properties. I am in the Los Angeles area and it is obviously a rather competitive market for this. I would love to hear how any of you have had success over recent years in finding good deals for fix and flip. Are properties that are mls listed still able to be profitable, or do you need find the off market deals to do so? What tips do you guys have for someone in my position. I appreciate the help and any networking possibilities.

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All Forum Posts by: Dan Schweit

Dan Schweit has started 11 posts and replied 107 times.

Post: Where to find positive cash flow properties???

Post: Where to find positive cash flow properties???

Post: Where to find positive cash flow properties???

Post: Where to find positive cash flow properties???

Post: Why have others given up? (conversation starter)

Post: How do I find the deals

Post: How do I find the deals