All Forum Posts by: Dan H.

Quote from @Alan Asriants:

Here is a note I found from Fannie mae:
ADUs are not eligible with a 2-4 unit dwelling, or when a manufactured home is the primary residence. Properties with multiple ADUs are also ineligible for Fannie Mae financing.

Did you see the Freddie Mac fact sheet I enclosed.   Your lender should use the f/f that can finance the property.  This is a way to state the rules are in reality the loser of the two.

in your case it does not matter because your proposal would put you at 5 units which does not qualify for f/f non commercial financing.  

going to commercial financing on 5 units will significantly hurt your valuation.   In my market the valuation with f/f non commercial financing is typically lower than the hands off cost of adding the ADU.  Adding a single small unit is very expensive development.  In your proposed case you would be compounding this negative position by taking away the best source of financing for a large percentage of potential buyers.  

I recommend not doing what your are proposing.  

good luck

Quote from @Sasha Mohammed:

Fannie/ Freddie does not like multi-family with ADU. "why?" you ask? good question. they didn't have an answer for me when i asked either. they just don't want them.

SFR with ADU is no problem. but if you're considering adding an ADU to a multifamily property, consider the limitations you're creating on your back-end buyer if you decide to sell, or your own financing if you choose to refi.

I'll also add that guidelines change over time. just because they don't like it now doesnt mean they wont decide later to be okay with it. 

That does not match what I believe the rules state. Single ADU on duplex or triplex is allowed for non-commercial f/f. However, The requirement for single adu seems seldom enforced on duplex if it stays below 5 units. ADU on quad pushes out of the non-commercial F/F. Multiple ADUs on any is not allowed, but I have only heard of it being an issue in SF zoned areas or if unit count hits 5.

If you want to be sure of getting non-commercial F/F follow the rules.  You may be safe to get non-commercial F/F adding up to 2 ADUs to a duplex even though by rule this does not qualify (in my area I have never heard of this being an issue).  Recognize if you are relying on non enforcement of rules, you are taking on a risk (investing is largely about calculated risks).

Enforcement may vary by location but should not.  My view is the rules should be consistently enforced.

adu-fact-sheet.pdf

Property Type / Eligible Properties
• One ADU is allowed on 1-, 2- and 3-unit properties.
• An ADU on a 1-, 2- or 3-unit property must comply with the
zoning and land-use requirements in the jurisdiction in which
it is located. The zoning compliance must either be legal,
legal non-conforming or locations with no zoning.
–Exception: An ADU on a 1-unit subject property that does
not comply with the zoning and land-use requirements
(illegal zoning) may be eligible under certain conditions.
• ADUs that are manufactured homes are allowed under
certain conditions.

Good luck

The f/f residential conventional rules indicate a quad with ADU does not qualify. However, the enforcement like some other rules is mixed.

As for the single family with ADU, it is not a duplex but most of the adverse LL laws do not refer to the 2 units as a duplex but MF or 2 units. This is especially true of the statewide rent control (1482).

As for your lot split I am unsure exactly what you are asking but an early hurdle if you do not own the property outright is to get the lender to agree to the split and work out the details. This is an additional step that would not be present for developing a lot where you are adding value. note a lender at high LTV may not desire a lot split. What if you do not develop the split lot? Al, lenders want their position to be protected.

Good luck

Unlike Robert K and many on this site, I judge a property based on total return.  This implies that if I had confidence of better than normal appreciation or ways to add value, I would purchase a negative cash flow property.  In fact my last completed purchase (I am under contract now for a different purchase) was huge negative cash flow.   Today it has good cash flow (~$6k/month using 49% expense ratio) and is up ~$1m above costs.  

The issue I see is that market has historical appreciation below average (not bad, but slightly poor).  Negative cash flow combined with historically slightly poor appreciation would lead ne to exit unless I had some reason to have confidence of appreciation above its historic rate.

https://www.neighborhoodscout.com/ok/yukon/real-estate

good luck

I do not understand your remark as related to the DSCR loan. 2 ADUs are not allowed by f/f conventional financing but is not always enforced.

Fortunately if you stay with the current tenant without a refi, by the time you pay principle it is likely the rent will have increased enough to absorb the increase mortgage payment. 

I would look at the DSCR loan as the first option.

By the way, I suspect you are going to be disappointed by any refi appraisals ADUs typically appraise poorly JADUs can lower the property value Vs having the space as part of the primary unit. A big reason is the OO requirement to rent the JADU as its own unit,

good luck

Quote from @Scott Trench:

Quote from @Joe Villeneuve:

The appreciation is applied to the property value.  Whether you buy all cash, refinance, or buy with a mortgage, it's the same PV,...which means it's the same appreciation.

 Agreed - my analysis incorporates this. 

If you want to build wealth and maximize IRR, lever up.

If you want to enjoy the ski slopes on Tuesday afternoon, pay it off.

 I would not do all cash because 8 would not invest in RE for the RE interest rate.   I would rather borrow as much as I can at the RE interest rate which it typically the cheapest money available.

You indicate using financing/leverage is the way to build wealth and maximize IRR but you state if you want to enjoy th3 slopes pay it off. This discounts how easy it is to access equity. If I use leverage I can purchase additional properties and increase the return from appreciation as a result of the leverage. extracting appreciation can allow me to ski or vacation. @Joe Villeneuve premise about worse cash flow depends what he is comparing it to. The rent growth has a tight coupling with the appreciation and in my the refi appraisals are conservative. This implies my cash flow after a refi is typically better than a rent ready market value purchase purchased at max LTV. I can use the extracted money to purchase additional properties or to do whatever I want.

I recognize I have benefitted greatly by my market’s appreciation.  5.82%/year for this century, 8.29%/year for the last 10 years, 10.31% over the last year.  If I can manage to maintain a 75% LTV (which I cannot), take those appreciation numbers and multiply by 4.  Why would I not choose to leverage at 6 or 7% (my current lock is at 6.385%)

https://www.neighborhoodscout.com/ca/san-diego/real-estate

my long time stance that the RE should be judged on total return use to be very unpopular view on this site that viewed cash flow as sure and superior and appreciation to be gambling.  It did not bother me as I kept achieving outstanding return even with poor initial cash flow.  Now the appreciation is superior to cash flow is the vogue view on this site (and supported by the numbers in many markets).  I still believe total return should be the measure even though I historically have made orders of magnitude more from appreciation.  My worse appreciating property has appreciated $2700/month over its long hold.  I have 2 properties that have appreciated over $10k/month over their hold.  Because of the leverage used, this appreciation is magnified. 

Perform conservative and accurate underwriting.  Recognize residential RE investing is not passive and has risks.  The return has to be enough to justify the effort and risk.  Let me be clear a few hundred a door in a market that historically has not kept up with inflation does not meet this condition.  

Best of luck on all investments.

Quote from @Damon Silver:

Can you clarify "you can't have another separate tenant live there?"  Why can't we have one, especially if we could have permitted separate utilities?

The rules regarding ADU renting varies by jurisdiction. I do not know the rules at your jurisdiction. In CA you can rent ADUs but can only rent JADUs as a separate unit if the owner lives on the property.

I interpretttev @Alan Asriants statement different than you but agree it is not clear   He could be indicating pools, basements, sunrooms do not provide a means for an extra tenant.  If he meant it the way you interpreted it, he could be applying the rules in his jurisdiction, possibly erroneously, to your jurisdiction.  

He is correct that a single ADU in a single family zoned area is unlikely to return as much as the hands off cost and is one of many reasons that adding a single ADU in most single family areas is not a good re investment.

Here is my list for reasons in CA.  Nore the rent control bullet is CA specific and I do not know how ADUs affect rent control in other jurisdictions. 

Here is a list of why adding a single ADU in single family zoned areas in my CA market is typically a poor RE investment:
1) The value added by the ADU addition is often significantly less than the cost of adding the ADU. Search the BP for ADU appraisals to encounter numerous examples. This creates a negative initial position. This negative position can consume years of cash flow to recover. Make sure you know the value the ADU will add to the property before building the ADU.
2) the financing on an ADU is typically far worse than for initial investment property acquisition or is often not leveraged by the ADU (HELOC, cash out refi, etc). Leverage magnifies return.
3) The effort involved in adding an ADU is comparable or larger than a rehab associated with a BRRRR. However if I do a BRRRR I can achieve infinite return by extracting all of my investment. Due to item 1, adding an ADU can require years to start achieving any return (once the accumulated cash flow recovers the initial negative position).
4) Adding an ADU is a slow process. It can take a year or more to complete an ADU. During this time you are not generating any return from the money invested in the ADU. This amounts to lost opportunity because if you had purchased RE, at the closing it can start producing return.
5) ADUs detract from the existing structure whether this is privacy, a garage, or just yard space.
6) this is related to number 1, but there are many more buyers looking to purchase homes for their family than there are RE investors looking to purchase small unit count properties. This may affect value or time required to sell.
7) Adding an ADU does not make the property a duplex. For example in many jurisdictions I can STR units in a duplex but cannot STR an ADU (some jurisdictions will let you STR if you owner occupy). Duplex have different zoning that may permit additional units. Duplex can always add additional units via the ADU laws.
8) Related to number 1, purchasing a property with an existing ADU is cheaper than buying a property and adding an ADU. Why add an ADU if it can be purchased cheaper?
9) adding multiple ADUs or adding an ADU to a quad looses F/F conventional financing. This reduces exit options and affects the value.
10) Small number of small units is the most expensive residential development there is. This implies residential units can be built at lower costs and provide better return than building a single ADU.
11) adding an ADU to SFH can make the SFH fall under rent control. In CA currently only MF properties are rent controlled. If the house is older than 15 years old and an ADU is added, it can become rent controlled. Rent control laws are market specific. Make sure you know the impact that adding an ADU will have on any rent control.
12) investors seldom include the land value in the overall ADU costs. The reality is the land has value.

before you add an ADU understand the numbers and work involved.  In particular know exactly what you negative equity position will be and how long it will take at conservative cash flow numbers (near 50% of rent going to expenses other than P&I).  It is very expensive to build a single small unit.  

Good luck

Quote from @Jeremy H.:

Quote from @Dan H.:

Quote from @Jeremy H.:

Quote from @Dan H.:

Quote from @Jeremy H.:

Quote from @Mary Jay:

Thank you sir!
So you feel like you get plenty of money from your not paid off rentals that allow you to quit your full time job?

 BIG DIFFERENCE between a a few cash flowing rentals vs retiring off of rental income. For example - I have a duplex that rents for $1350 - the mortgage when I started was $636. So roughly 700/month cashflow. Say 50% of that goes towards repairs/maintenance/vacancy etc. That leaves me with $350/mo. 

$350/mo. Going to need about 30 of those to live how I want to. 

So I would say the cash flow is little - more leverage generally means less cashflow as well. But then you put more money down (for less leverage) and there goes the opportunity cost of a lot of over investments as well as your liquidity. 

I use real estate to diversify my investments more than anything now. A little cashflow, some tax deductions to kick down the road, long term appreciation and loan paydown. It's slow money. I think long term it can make sense especially if you can 1031 exchange into something down the road. 

I claim if you properly allocate for sustained expenses this is negative cash flow.  I also claim that the price and rent indicate it will not appreciate or have rent growth significantly better than inflation.

I could not live on 100 of these (I admit to spending a lot of money).  This is not worth the effort and risk of owning a duplex. In my market every PM would charge more than your projected $350/month (which I already indicated is not reality) to manage two average size units in a duplex.

This does not mean cash flow does not exist.  It means you may need to be a better hunter or understand ways to add value.

Good luck

I claim you eat crayons. Doesn't mean that markers don't exist. You may need to look under the couch for those. 

It's a good deal that works bud. Bought for 104k cash, rehabbed and did a cash-out refi. Left almost nothing in the deal and got a great equity capture at the buy. On top of that (even with the insurance rate increases here) it STILL almost hits the 1% rule in terms of cashflow. While the absolute value may not be high - I have a rehabbed duplex (can you say practically $0 repairs/maintenance/CapEx for the next 10-15 years since I rehabbed when I bought it?) that sits right on the parade routes, a block from the college campus, and block from a bunch of restaurants and bars. Maybe a month of vacancy total in the past 3 years.

I'll take that deal all day. Maybe slow down on the crayons bud, you're looking a little green.  

Good luck. 

Your definition of a good deal is very different than mine.  How long have you had rentals?  Have you ever filled out an maintenance/cap ex spreadsheet with expected lifespan and expected replacement costs to try to accurately estimate sustained maintenance/cap ex.

I already know you did not accurately project increased insurance costs.  We owned a property once that had crazy insurance increase (it got hit by hurricanes in 2 consecutive years).  Fortunately it had a rent point in a different stratosphere than your depicted rent income and could absorb crazy high insurance increases.

@James Hamling is correct about those cap expenses coming.  He is not correct about the need to sell before they come IF you have accurately allocated for the expenses and the underwriting depicts a profit worth the effort and risk. 

If you purchased or refinanced at near rates near current rate, at that rent point, 1% is negative cash flow when properly allocating for the sustained expenses.  Or you can try James' approach to sell before the significant cap ex items but I suspect you will be selling at a price that reflects the impending coming costs.

It is my belief that you have never calculated out your sustained maintenance/cap ex costs and truly believe this has positive cash flow.

I am trying to provide some insight as to your view and to your situation.  You seem to not want to take it as intended (to educate) and I am not sure it that is name calling or whatever it is.

I do wish you would take the time this week to do the effort to properly estimate your maintenance/cap ex for a sustained hold.  I believe it will be enlightening and will provide some clarity to my post.

By the way I am retired on RE investing (actually i have made enough money in 3 different sources for most people to retire on any one of them).  Cash flow is possible, but it also is not necessary to retire off of RE.

Good luck and I wish you the best

I fill out a spreadsheet w/ the bigger ticket items - roof, siding, AC (this one has a mini split), hot water heater, flooring. Smaller items like fixtures, countertops, cabinets I don't worry about as much. This is a small property so the smaller items don't amount to too much. 

For this particular duplex - upstairs flooring will come up - looking around $1500 for LVP installed. Roof would be around $5000. Brand new mini split AC installed around $1000. Siding is the big ticket item here. Hot water heaters are tankless and new. Fixtures are new. Countertops are ok - would do a butcher block here - looking around $500 installed (can be sanded, refinished, sealed, epoxied over etc). Plumbing is all brand new. In $2024 I spent $56 on repairs/maintenance between both units. I have this in a spreadsheet and generally divide by how long I think that particular item will last to come up with a monthly cost. 

Insurance costs I think were predicted reasonably. No one (ask the people who had to move out of their home due to insurance costs) is predicting insurance costs doubling, tripling in 2-3 years. This duplex is still cashflowing after absorbing the increased insurance costs. In fact it still almost hits the 1% rule. Do you typically take your insurance estimate, then multiply it by 3, and use that as an expense? I doubt anyone does because that wouldn't make sense. 

I don't see how rent point has to do with absorbing high insurance costs. If your rent is $3000 and your expenses are $2900, you still can't absorb a high insurance increase. It really has to do with the spread between rent (income) and expenses. Insurance on a 1mm property will also go up a lot more than a 100k property. 

I'd actually like to hear your methodology on buying. I understand you have a lot more experience than me (and experience is often the best teacher) but I still think I have done some things right with this property and I think it works out long term. This was my first property, I've owned it for about 3.5 years, and "started" in RE about 4 years ago (all stock market investing prior). I can take a step back for a minute though. A lot of the social media "guru" stuff has gotten me to be an extremely quick skeptic here lately. So I can admit that and that I am very far from being an expert. 

You are under allocating for sustained maintenance/cap  ex.  Let me ignore that I am skeptical of some of your expense estimates.   Here is the reality of the items, every item (including included appliances) in a unit has a lifespan.   When the item is new, that life span has started and its replacement cost should be in the expense estimate starting month 1.  Otherwise when do you start allocating for it?  Let’s say half of life you allocate double, you will still collect enough but you will have months with deceiving cash flow estimates.  I do not individually allocate for the small items but the maintenance/cap ex worksheet contained the reasonable costly stuff like you mentioned then had an entry for all of the small items (bathroom lights in some of my locations do not last 10 years). 

So why does rent point matter.   It is because material costs on most things do not vary by location.  This implies as a percentage of rent the maintenance/cap ex is higher at cheap rent points. In addition, at cheap rent point in a market (not implying this is the case for your duplex, it could be the entire market is at this low rent point) the tenant class is lower.  lower tenant class is harder on units and fail to pay rent at higher rates in general than higher class tenants. 

However at high LTV at my current rates (my DSCR rate is nearly 2% lower than your specified rate), my underwriting shows 1% ratio to be cash negative in my high rent point market which is why I am confident you have negative cash flow when properly allocating for sustained expenses.

We owned units in perhaps the highest insurance increase ever.  Around 20 years ago we had a duplex on the sand of gulf shores Alabama.  2 years in a row direct hits from hurricanes, you can look it up.  The 1st red tagged 50% of the properties on the sand and they all needed to be rebuilt off the sand.  Next year did the same with the remaining on the sand red tagged at 50%.  Somehow our units were in the 25% still on the sand.  We collected a lot of money from insurance both times.   Our insurance rose to $6k/year (remember this was in 20 years ago money).  Did I allocate for that sort of insurance increase?  No.  Did I allocate margins that justified the effort and risk?   Yes.  I still had positive cash flow after the crazy high insurance increase.  It was much less than I originally had forecast.  $hit happens.  In your case and my case in the example sited the insurance rose higher than could reasonably be forecast.  $hit happens.   This is one cause of the $**** that can happen. 

I also am finding it not easy to find holds that project the return I seek. My current purchase is a luxury cabin at $500k that has stabilized STR income of $100k. Those numbers superficially look good but the expense are super high. It does not have good cash flow. But it is outside a recently created national monument. Neighborhoodscout forecasts near 30% appreciation over the next 3 years (my underwriting did not use anywhere close to this amount, but it would be nice if it happened).

I am unsure there will be a path to the profits you seek from this property but I think you took action.  You now seem receptive to reading what posts are saying (this did not seem to be the case early on this thread).  You are learning.   If you can learn and make any money then it is not all bad. A lot of people pay gurus a lot of money and will likely learn less than you will and you may make some money. 

Here is my advices summed up succinctly.  Do accurate and conservative underwriting (including accurate maintenance/cap ex).  Make sure the return justifies the effort and the risks.  Residential RE is not passive, even with the use of a PM.   the profits have to easily justify the effort and risks (including crazy insurance cost increases).we do not invest to make $30/hour.  We invest in RE to make life changing money.  As you have already noted a few hundred a door of profit a month does not achieve that. 

Good luck and for the first time in this thread I believe you will succeed.  

Quote from @Jeremy H.:

Quote from @Dan H.:

Quote from @Jeremy H.:

Quote from @Mary Jay:

Thank you sir!
So you feel like you get plenty of money from your not paid off rentals that allow you to quit your full time job?

 BIG DIFFERENCE between a a few cash flowing rentals vs retiring off of rental income. For example - I have a duplex that rents for $1350 - the mortgage when I started was $636. So roughly 700/month cashflow. Say 50% of that goes towards repairs/maintenance/vacancy etc. That leaves me with $350/mo. 

$350/mo. Going to need about 30 of those to live how I want to. 

So I would say the cash flow is little - more leverage generally means less cashflow as well. But then you put more money down (for less leverage) and there goes the opportunity cost of a lot of over investments as well as your liquidity. 

I use real estate to diversify my investments more than anything now. A little cashflow, some tax deductions to kick down the road, long term appreciation and loan paydown. It's slow money. I think long term it can make sense especially if you can 1031 exchange into something down the road. 

I claim if you properly allocate for sustained expenses this is negative cash flow.  I also claim that the price and rent indicate it will not appreciate or have rent growth significantly better than inflation.

I could not live on 100 of these (I admit to spending a lot of money).  This is not worth the effort and risk of owning a duplex. In my market every PM would charge more than your projected $350/month (which I already indicated is not reality) to manage two average size units in a duplex.

This does not mean cash flow does not exist.  It means you may need to be a better hunter or understand ways to add value.

Good luck

I claim you eat crayons. Doesn't mean that markers don't exist. You may need to look under the couch for those. 

It's a good deal that works bud. Bought for 104k cash, rehabbed and did a cash-out refi. Left almost nothing in the deal and got a great equity capture at the buy. On top of that (even with the insurance rate increases here) it STILL almost hits the 1% rule in terms of cashflow. While the absolute value may not be high - I have a rehabbed duplex (can you say practically $0 repairs/maintenance/CapEx for the next 10-15 years since I rehabbed when I bought it?) that sits right on the parade routes, a block from the college campus, and block from a bunch of restaurants and bars. Maybe a month of vacancy total in the past 3 years.

I'll take that deal all day. Maybe slow down on the crayons bud, you're looking a little green.  

Good luck. 

Your definition of a good deal is very different than mine.  How long have you had rentals?  Have you ever filled out an maintenance/cap ex spreadsheet with expected lifespan and expected replacement costs to try to accurately estimate sustained maintenance/cap ex.

I already know you did not accurately project increased insurance costs.  We owned a property once that had crazy insurance increase (it got hit by hurricanes in 2 consecutive years).  Fortunately it had a rent point in a different stratosphere than your depicted rent income and could absorb crazy high insurance increases.

@James Hamling is correct about those cap expenses coming.  He is not correct about the need to sell before they come IF you have accurately allocated for the expenses and the underwriting depicts a profit worth the effort and risk. 

If you purchased or refinanced at near rates near current rate, at that rent point, 1% is negative cash flow when properly allocating for the sustained expenses.  Or you can try James' approach to sell before the significant cap ex items but I suspect you will be selling at a price that reflects the impending coming expenses.

It is my belief that you have never calculated out your sustained maintenance/cap ex costs and truly believe this has positive cash flow.

I am trying to provide some insight as to your view and to your situation.  You seem to not want to take it as intended (to educate) and I am not sure it that is name calling or whatever it is.

I do wish you would take the time this week to do the effort to properly estimate your maintenance/cap ex for a sustained hold.  I believe it will be enlightening and will provide some clarity to my post.

By the way I am retired on RE investing (actually i have made enough money in 3 different sources for most people to retire on any one of them).  Cash flow is possible, but it also is not necessary to retire off of RE.

Good luck and I wish you the best

Quote from @Mary Jay:

Quote from @James Hamling:

Quote from @Max Emory:

Quote from @Henry Lazerow:

@Max Emory what you’re saying is absurd, you most definitely can cash flow on leveraged real estate. I have a 4 unit that has a mortgage and consistently nets me 25-35k after everything each year including reserves. I have tons of clients with 3/4 units that also hit similar returns consistently after the first year or two.

 @Henry Lazerow, thanks for your perspective. I apologize if my post offended you.

I have leveraged rentals that cash flow as well. I'm not saying it's impossible or they don't exist. I'm only saying they're not as prevalent as the ones that do not cash flow.

I think you raise a great point Max, not the one your stating but the underlying that brings one to say or think such which is this "rainbows n fairy-farts" fantasy that there is some plethora of "ATM" investment real estate out there. 

All that garbage made to sell books or guru programs is just that, BS marketing slogans. 

There has never been a time where most properties were instant "ATM's". Not in 2010, not in 2020, not even in 2000, not ever. 

Looking back, sure, after the fact looking back on a 2010 buy one can say how "easy" it was and how it rapidly became a "cash-cow" but at the moment in time of the buy, no, it was NOT prevalent or known what they'd be the next year, 5, 10 etc.. 

And as a person who was actively FT investing then, I can say that the majority of talk was on more of a drop, W recovery, going too $0, decades of dystopian life etc etc.. It was anything BUT "guaranteed $". 

I was considered a contrarian, MOST of us active in REI at the time were considered contrarians. And just like today, for ever 1 doing, there were 99 talking about doing, someday, when it's "perfect" and how they'll time the market......

Most only see problems, ever so few see the opportunities and remove emotions to follow the math.  

I blame the BS programs. They pump false beliefs and false narratives because fact is they connect and sell. 

Not every/any property works as an investment vehicle. This stands true for any/every investment segment in existence; stocks, ETF's, business ventures. It's always been about digging through the coal to find the diamonds. 

Good point!
So I am always confused as to how do the properties that make only $300 per month in cash flow , how can those landlords live off of those/retire off of those...
May be, like someone said earlier, you hold the property for 7 years and then sell it?
Because 3.6k per year is good, but then a tenant moves out, the house sits empty for 2 months so u just lost your 3k (mortgage 1.5k, lets say)...
Every 10-20 years you need a new roof, thats about 13-16k  (Although 8 years ago I
dishwasher/washing machine/Ac/heater, those things break...
I dont see how landlords can retire with $300 cash flow from 10-20-30 properties...
I understand when people make 1k per month in cash flow, but $300, not sure how all this works...

My cash flow calculation is based on accurate and ideally conservative underwriting that includes all expenses including maintenance/cap ex, vacancy, PITI, book keeping, asset protection, misc.

I would never bother with a unit for pure investment that was projecting anywhere near as little as $300/month total return.  It is not worth it to me.  too much work, too much risk.

I am retired from W2. I can easily live an expensive lifestyle off my RE returns. I will say it was easier prior to q2 2022 to obtain good investment RE than it is today. However, I hope to purchase a property this month that stabilized annual revenue is over 20% of purchase price. I am buying at 75% LTV so one year of stabilized income is almost my down payment. I do not really look at it that simplistic as there are a lot of expense allocations; income does not equal cash flow, income minus PITI does not equal cash flow.

Good luck