All Forum Posts by: Weng L.

@Weng L. What am I missing here? Why is everyone suggesting this creates negative cash flow? I assume the $1,900 in expenses includes ALL expenses, mortgage and interest. If so, it generates $800/mo or $9,600/yr. Cash-on-cash return is 9.6%.

Bottom line is you need to have a criteria and run the analysis. If the analysis meets your criteria, then do the deal. Use the BP calculator and repost your analysis

$1900 includes mortgage, tax, insurance and HOA. It doesn't include repair and vacancy

https://www.biggerpockets.com/...

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Originally posted by @Dan H.:

I agree with the posts that indicate the cash flow is poor for the investment amount.

However, I invest in a poor cash flow, high appreciation market. We typically do BRRRR to get immediate return. I do not understand why it would take you 5 years to get your money back on a Brrrr. Cash flow is only one factor that determines if an RE Investment will be a good investment. Your example does not have any value add. However, how are the appreciation prospects? I have purchased cash neutral properties that due to rent appreciation now have over $1k cash flow a month (that particular property also had close to $100k value add). In addition, every RE that we have has appreciated over $1k/month over the holding period.

In summary, I would not make a purchase decision solely on cash flow unless it was in a different league than you example. You example needs to be evaluated using all sources of return.

Good luck

I believe when @Joe Villeneuve says "negative for over 10 years", he means $800/month cash flow (2700-1900=800) and $100,000 upfront investment, not counting appreciation.

I hold 6 properties, average appreciation per property is $20K/year. It may not be that much from now on though.

With BRRRR, I get about $800-$900/month cash flow with $50,000 out of pocket (So it is 5 years to get the $50,000 back). But I spent may be 200 hours on it. If I buy turn-key property and new construction, I pretty much spend no time on it. So hourly income of buying turn-key property is much higher than BRRRR. Do I evaluate it correctly?

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Originally posted by @Joe Villeneuve:

Originally posted by @Weng L.:

Originally posted by @Joe Villeneuve:

Originally posted by @Weng L.:

Originally posted by @Joe Villeneuve:

NO. Not with those terms. You would be negative for over 10 years. I would like to have it less than 2,,,and closer to 1.

What would the CF be if you only put 20% down? Probably negative. That means the only thing you're doing with a higher DP is paying for all that negative CF upfront.

Thank you for your response. What do you mean by "2" and "1" here?

What does "CF" stand for? Minimum down payment required (for me) is 25%

I am seeing lots of investors are buying this kind of property in cash and rent them out in my metropolitan, the profit is less than financing though

So, again, the answer to your question is still an emphatic.....NO!!!!

Thanks. Do you have any recommendation on how to invest in this market? I see much fewer profitable properties for rehab in the market. Prior to COVID-19 when there were more properties, if there was a property of e.g. $200K-$300K with less than $20K profit after flipping, lots of investors would go for it. I did a couple of BRRRR but it takes 5 years to get the money back.

Not enough info on the market, however generically I have two answers for you:

1 - Learn a different strategy that does work in that market. Examples could be:
a - Sandwich Lease Options
b - Using LLC's to make offers and sell the LLC instead of the property either before or after the LLC closes on that purchase (many ways to do this)
c - and many more.

2 - Invest in a different market. One that DOES work.

If it ain't broke, don't fix it. If it is broke, either fix it (see #1 above) or replace it (#2 above).

Both option 1a and 1b are labor intensive, correct? I should have shared my background: I have a full time job, real estate investment is just part time and the cash flow so far is no where near my job pay. I am looking for investment that has good hourly income (cash flow and value appreciation combo), not necessarily highest profit per dollar invested. I have $300K cash right now which I don't have a way to invest (If I spend 6 months and put $50K out of pocket on each BRRRR to achieve $1000/month cash flow, then I need to flip 6 properties to spend these $300K). The problem is that I don't see any property worth buying and flipping in last couple of months. Also with my job pay and rental cash flow, I have $130K-140K saving in cash per year. So how to turn these money into profit quickly and yet not to spend too much time as I already have a full time job?

According to the builder and county records, half of the properties in the community that I am interested in are purchased by investors for rent, cash purchase and financing are 50:50. Do these investors buy them in hope of value appreciation if cash flow is so bad?

1 Vote

Originally posted by @Joe Villeneuve:

Originally posted by @Weng L.:

Originally posted by @Joe Villeneuve:

NO. Not with those terms. You would be negative for over 10 years. I would like to have it less than 2,,,and closer to 1.

What would the CF be if you only put 20% down? Probably negative. That means the only thing you're doing with a higher DP is paying for all that negative CF upfront.

Thank you for your response. What do you mean by "2" and "1" here?

What does "CF" stand for? Minimum down payment required (for me) is 25%

I am seeing lots of investors are buying this kind of property in cash and rent them out in my metropolitan, the profit is less than financing though

So, again, the answer to your question is still an emphatic.....NO!!!!

0 Votes

Originally posted by @Joe Villeneuve:

NO. Not with those terms. You would be negative for over 10 years. I would like to have it less than 2,,,and closer to 1.

What would the CF be if you only put 20% down? Probably negative. That means the only thing you're doing with a higher DP is paying for all that negative CF upfront.

Thank you for your response. What do you mean by "2" and "1" here?

What does "CF" stand for? Minimum down payment required (for me) is 25%

I am seeing lots of investors are buying this kind of property in cash and rent them out in my metropolitan, the profit is less than financing though

1 Vote

There are fewer short sale or foreclosure in the market right now so I am thinking to buy move-in ready investment properties directly with 25% down payment and 30-year fix mortgage

If down payment and fees all together are $100,000, monthly expense total is $1900, monthly rent is $2700, turn-key new construction. Would you buy this property?

0 Votes

There are fewer short sale or foreclosure in the market right now so I am thinking to buy move-in ready investment properties directly with 25% down payment and 30-year fix mortgage

If down payment and fees all together are $100,000, monthly expense total is $1900, monthly rent is $2700, turn-key new construction. Would you buy this property?

0 Votes

Originally posted by @Jeremiah Goodpaster:

@Weng L.

In the process right now. Being told 70% at ~4% they were at 85% this past December but I hadnt held the property long enough. Also told it could take 1-2months due to back log. I’ll update once we close or I get better numbers from them. This is in NC

70% at 4.0 is best rate as of right now. 85% is really good on invesetment property if rate is around 4%. If you don't mind, could you please PM the lender? I plan to get in touch with lenders after June 1st.

1 Vote

All Forum Posts by: Weng L.

Weng L. has started 24 posts and replied 87 times.

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