Thread: Is this fastlane? $25 a week positive cashflow. "My" first unit.

Originally Posted by BryanC

Is $25 a week positive cashflow good for a first time rental property experiment? All paper work and what not is already made up. Preexisting mortgage, insurance, and property management. Property was bought in 2001 for $70,000. County Clerk lists the property at $177,000 market valuation. I don't exactly trust the clerk, though, because it is not spot price. I guess it's really an appraisal?

What do you guys think?

Two ways to look at it:

1) It is on the right track, few even have that amount of passive income in their lifes.
2) It may be a bad return on investment percentage wise.

As I see it, you are on the right track and the return on investment can always be improved. So I give you an applaud for good job.

I like to think in terms of how many properties it will take me to reach a set goal like $1000 per month of cashflow, $2k, $5k, $10k....

So then I do my math, and the easiest way to hit that goal is to earn more per month.... Which is why I won't consider a property that has less than $200 per month, and really target properties that make $300+ per month.

Cheers!

- Hakrjak

Are you sure you're actually getting $100/month return?

For example, there are plenty of people who can theorize that they are cash-flow positive on a rental, but only down the road do they realize that they forgot to take into account things like vacancy, maintenance costs, capital reserves, tax increases, *proper* insurance, accounting costs, overhead costs, etc.

If you provide more info, folks can probably help you determine if you're really getting $100/month (which isn't too bad), or are just theorizing $100/month.

Some questions:

- How much are you renting the place for?
- How much did you put down in down-payment?
- How much is you loan for?
- What are the loan terms?

I started out that way 13 years ago with 23 SFH cashflowing about a $100 a month each. What a nightmare. I was making no money and running around getting burn out. I sold them all and went into flipping. I was taught to leverage everything with mortgages. I don,t like leverage anymore. I now only buy great deals with cash I make from flipping. I enjoy cashflow of $500 a month on each property with 30% returns on my money. Take your time and find a better deal then $100 a month cashflow.

Dhappy,
I wonder where do you find deals which bought by cash give you 30% of return - could you please give an example of such a deal?

Yes, I'd like to see an example of this to dhappy!

Sounds good but, I am not a flipper. In my opinion a house is a place to live not something to flip out to the greater fool. I am not sure about your perspective on such matters but, maybe it is the perspective you gained after spending more time in the R.E. biz. I might see it this way to eventually so I don't want to criticize you. This is the first Rental Unit I've looked at so far. I am looking at two more this afternoon.

You said, "I don't like to leverage anymore. I now only buy great deals with cash I make from flipping. I enjoy cashflow of $500 a month on each property with 30% returns on my money."

This is a pretty broad claim. I mean there is certain ways to solve certain problems, I am sure. I know Real Estate offers A LOT of exotic ways to increase one's Equity position in the property. But you're telling me you've consistently invested 100% of your own equity in this and use no debt financing while you've watched your position grow and grow with 30% returns and that much CF?

Regards,

Bryan C.

I never flip to more of a fool then I. My flips are bought real cheap and in need of work. I fix them up and sell below market giving the end user a great deal. I hate leverage and hope I never have to use it again.

Example of 30% return I just did a few months ago. Paid 23k for a house in a good working area( I would live there with my kids) I put 5k into it and it is rented fo $1100 a month. Taxes and Ins come to $150 a month. I manage and repair all my own units. Sometimes you need leverage starting out,but stop as soon as you can. I also love to do mobile homes on land and make way above 30% returns on them.

This actually sounds very good now that you put it this way. I will admit I am not a Real Estate Guru so I do not know much about it. I am basically just experimenting and learning as I go. I read about as much as I could on Real Estate till I finally said screw this sh*t. So I finally started looking. But, I can still see how what you are talking about would logically work in my head. With the Magical Approach, you could probably do tons of deals like this a year. Good job!

Where have you found the best deals available? Shopping foreclosures??

Most of the RE deals that you see will not work for cashflow. Many of the foreclosures will not work either. If you come across a deal that will work you will have to have all your ducks in a row to buy it NOW. If it's a smokin deal it won't be around long. You need to know your rental rates in your area. You need to have some sort of idea about the insurance costs. You need access to your local CAD and Tax assessor, probably online. You need to know interst rates for the mortgage and be preapproved for financing.

The best deals are not widely known to the public. You need to network and let everyone in your area know what you are looking for. You may get a call and you need to be ready to jump.

Well, I just got a call. The tenant just viewed the property at 4PM and he has decided to take it on. I'll fill you guys in as I find out more details...

Good post Runum. I am definitely pretty familiar with my County Clerk's interface.

Anyway, going to look at 2 more of these deals between 6-9PM. Talk to u guys tonight.

I did came to the same conclusion about leverage though and that this kind of deals are the best to invest for me, however till now I never knew someone actually finds those constantly...

You mentioned "I also love to do mobile homes on land". I read all your posts but still didn't understand - do you own trailer park? or each home comes with its own land - so basically it's no different from regular SFH?

Yeah, I chuckled at the Trailer Park idea... but if it works. I am mostly looking for that stream of income myself. I want the income stream plus the asset.

What are the details?

If your getting less than a 10%-12% ROI on something like that than your just moving money around IMHO.

$100 a month is a razer thin margin, what vacancy rate are you factoring in?

hatterassguy: My bad man, I forgot to give details. I don't know how to best explain it so I drew a Bryan C. edition blueprint picture.



Yeah, you're right on the ROI. I really have no idea what I am doing so I arranged it so that I am off the papers. It's all cash starting out. I think am getting more than 100% return on this because I have no money in it, don't own the place, and kinda have no proof that I am in the deal other than the Contracts and NDA the Buyer signed and the Contracts and NDA the Seller signed. I kind of made it that way so they both feel more compelled to stick the deal out.

I said I had my Attorney make the papers up. But what they don't know doesn't hurt them so it's all good browskotta. They don't know I just used it out of my $29.95 Barnes and Noble legal kit and my Rich Dad's 6 Steps To Real Estate Riches course. LMAO. I'm sorry but, this is how I did it for real. And they ate up every bit of it.

Here is how I stumbled into this deal: A friend of mine has been bitching lately about moving to a better place because he can't stand his room mate. I was at his house the other day picking up the new updates for one of my websites and he was going off again so I said, "Why don't you do something about it then and get out of here." He said, "What is that supposed to mean? Is that a challenge, are you saying I'm a pussy." I said, "Yes, you are. Indeed, you're just that a pussy. Additionally, I'm going to find you a place before Midnight."

So, what I did was find a person with a room to rent on Craig's List. I emailed about 5 people and pretended like an interested tenant. I got a response, the next thing I know I was talking with a person who had a place. I made arrangements to go look at it in 30 minutes.

I went to look at the place and check it all out. Was a perfect match for the friend.

I told the guy I'd like to move in ASAP. We talked about the price. He said, "I want at least $65 a week." I told him I'd give him $50. He finally said Okay. So we settled on $50.

At this point, the guy thought I was the one going to rent it. Little did he know, I had a trick up my sleeve. As many of my readers may know, I'm a trickster. A scoundrel in his own class and on top of the world. Nothing can stop me.

I then left the scene of the crime and called my friend and told him I found him a new place. A place cheaper, better, bigger, and quieter. He said he would be happy to pay me the $85 a week for the place instead of the shitty $430 he is paying the dude he is living with right now.

I called this guy back about 2 hours later and told him the news. I told him I wouldn't be able to rent it from him but, I have a friend with Good Credit, Good Job, and a Good Background who would be willing to pay him $60 instead of $50 like I had chewed him down too. LoL.

I knew I had a deal at THIS point. I just didn't know how I'd get paid out of this. I had to devise a plan so I came up with this. I told the Seller of the room that he'd never get to meet the tenant unless he signed some papers and I told the Buyer like wise.

They both pretty much signed the papers and we all agreed that I'd handle the money. The seller said he'd have no problem with me paying him and the buyer said he had no problem paying me. And they both agreed on the paper they signed that the rent would not be a topic of discussion.

I mean, I don't really know what's going to happen. Or what if it will work out long term... I really just want the experience and I want the education of Tenant Psychology.

But yeah, that's how it happened. I tried this again with a person looking for rent I found off Craig's List and trying to see if this one falls through. If it does, I might be getting $35 a week off of it.

I am basically connecting people with each other and residually taking a little off the top for myself each month.

I know $140 and $100 isn't nothing to ride home about but, I know sure as hell I didn't know this last week. And plus the way it's looking, I just increase my Income $240 a month and I got no money in these deals.

I got to get to be up early tomorrow because I got another potential rent supplier. I am wondering what is going to happen because the seller is like an old lady. I'm still going to see what I can rig up because I am sure there is another elderly person just getting ready to enter this rental market. My approach is going to have to be different, though, I told her I was 42. She's going to know I'm really 21 when she sees me. LoL.

I am probably going to have to come clean and just tell her up front I am a young, incompetent wanna-be Real Estate Investor and I want to help her find a renter for a small fee every month.

arfa, I would love to own a park. I have been looking for years, but have not found one that would cashflow like I want. All of my mobiles are on lots just like buying a house. I never knew they were out there until I started looking for them. I like the older mobiles,because they are real hard to get financing for. The seller is stuck if he wants to sell and I come along a pick them up for next to nothing. I bought one a few months back for 7k and put 1k into it. It is on a 1/4 acre and the seller paid 40k for it a year ago. Even with the rental market soft here it rents out for $500 a month and taxes and ins run $50 a month. Before the rental market got soft I would of got $600 a month rent.That is the great thing about not having a mortgage, I can drop the rental price and still make a great return when the rental market is soft. If I had a loan with a bank I would be hurting each month. Buy right with cash if you can and work yourself right out of that job.

Congrats on the infinite return Bryan, assuming you have made sure what you are currently doing is legal in your state. If you haven't...I'd probably delete that post .

dhappy, I wonder, why would you prefer to have a park instead of various properties? Since you buy them on land it means you have more land as an asset, it means you'll be able later to sell much easier if you'll have to...

Well if its legal and you can get away with it for awhile have fun.

Since this is the RE forum, and the way you worded the thread I thought you bought something.