How to get great cash flows? - Posted by Ed

Posted by Wayne on December 30, 2000 at 08:32:51:

Try using spell check. It works for me. I found it by luck as I am not real computer literate. I am a good speller but this just helps.

How to get great cash flows? - Posted by Ed

Posted by Ed on December 20, 2000 at 22:02:58:

I have bought the Carleton Sheets course and generally have done very well with it. I’ve used many of his techniques. One thing I can’t figure out, though, is how do his students get the great cash flows they claim to be getting? I’m lucky to get $100 or so a property with the deals I structure. What’s the secret to great cash flows? Buy big, multi-unit bldgs? Do great cash flows come only in certain areas of the country?(Obviously not where I live!) In certain economic times? Just buy many, many properties? Anybody know what’s the secret to that? Thanks!

Re: How to get great cash flows? - Posted by Todd (MO)

Posted by Todd (MO) on December 23, 2000 at 22:59:05:

I never buy a single-family home unless I can get no less than a $200 a month positive cash flow - minimum. And that’s on properties under $100G and that aren’t distressed. I require more above $100G. I have done this in MO, KY, IL, and AZ in good and bad economies. Maybe I’ve been doing something wrong? You just have to weed out the ones that don’t cash flow.

Whatever I’m doing…I don’t want to stop.


Re: How to get great cash flows? - Posted by Josh

Posted by Josh on December 22, 2000 at 02:07:25:


The thing to remember in this business, is that it usually is a “numbers game.” You usually are not going to make a killing on any single property. I myself usually make between $100.00 and $150.00 per unit . . . so with a duplex(2 units), I would be bringing in between $200.00 and $300.00. For some reason though, a local realtor told me that i am lucky to get the positive cash flow that I do get. I do not know why she considers me to be lucky. I only buy duplexes or triplexes, and $200.00 positive cash flow is the minimum that I will consider. Doing this, I can easily make around $7,000.00 per month in positive cash flow. (depending on how many houses I may have at any given time)

Some things to keep in mind are:

How long are you amortizing the loans for . . . 15, 20, or 30 years? With every duplex that I purchase, I compare the difference between a higher payment at 15 or 20 years, resulting in less positive cash flow . . . to a standard 30 year term, which results in a larger pcf per month. The question to consider is whether or not it is worth it to you to have less pcf per month, or less money going to interest.

For various reasons, (financing techniques that I use) I go with the 30 year note.

I also have found that various home warranties have saved me quite a chunck of change.

Josh K

P.S. I live in WI if that means anything. It should not matter where you live though.

Re: How to get great cash flows? - Posted by Mike-BC

Posted by Mike-BC on December 20, 2000 at 23:29:44:

My experiences are similar to yours. The single family residences I have owned brought in little in the way of positive cash flow. In fact, any sizeable repair - furnace, roof, etc… would put me several months behind just trying to catch up without using money from my pocket.

Then I bought a 6 unit building. Rents were 700-750 per month when I bought it, while expenses including mortgages totalled $2400 per month, so I was pocketing about $2000 per month from this building alone. Unfortunately, rents are now down to 650 pm so my take home income from the property is down to $1500. The upside of course, is that principals on mortgages are being paid down, equity is growing and the market will turn around at some point.

Re: How to get great cash flows? - Posted by ASIM

Posted by ASIM on December 22, 2000 at 16:18:04:

Positive cash flow properties are a myth for us who live in California…I feel that geographic regions do matter. I posted similar questions regarding this. It’s simply almost impossible to find positive cash flow properties in close to Los Angeles, Orange County, or San Diego. Same applied to Silicon Valley and SF Bay area…Any one with experience investing in these areas? Greatly appreciate your input!

Re: How to get great cash flows? - Posted by WayneMD

Posted by WayneMD on December 21, 2000 at 06:54:09:

Mike – Why are the rents down? They seem to be going up everywhere else. Also, are you talking Canadian funds (ala BC)? I thought the economy was booming along in BC.


Re: How to get great cash flows? - Posted by Mark (SDCA)

Posted by Mark (SDCA) on January 03, 2001 at 12:35:34:

Think more creatively. Everyone here is talking about buy and hold ie get a mortgage and rent it out. Tough to do in the markets you listed above.
But what about sandwich leasing?? That makes much more sense in these markets and DOES provide a positive cash flow.


Re: How to get great cash flows? - Posted by Josh

Posted by Josh on December 22, 2000 at 16:25:22:

Yes, I think that to a degree, your geographical location does matter. Some people will say that no matter where you live, you should be able to create a deal that is creative enough, so as to give yourself a positive cash flow situation. I think that this may be true, but living where I do, does make a difference to a degree. I have read similar posts by people in various economic conditions, and it does seem to be tough in some areas of the U.S.

Hope things work out for all of you in those “difficult regions.”

Josh K

Re: How to get great cash flows? - Posted by Dave

Posted by Dave on December 23, 2000 at 24:02:46:

You’re right, location does make a difference. However, in most cases, because cash flow is the result of having a mortgage and expense total that is less than the rent, If you can pay down the price (down payment) enough, you will have positive cash flow. OR, if you hold it long enough, and rents rise, you will have it.
Another way is to flip properties until you can aquire a big enough down payment. I hapened to hit a rising economy when I started, and rents were rising about 5% per year. The economy will probably slow in the months ahead, so now is a good time to look for MOTIVATED sellers. If you can do a low down payment deal AND positive cash flow, you have this game figured out!
Happy hunting!

Dave Mckee

Re: How to get great cash flows? - Posted by Wayne

Posted by Wayne on December 29, 2000 at 17:32:09:

Yes, larger down payments will give you a positive cash flow but, what about the opportunity cost of the down payment? You are losing the investment income of that cash even if it is in a CD. YOU have to figure your cost of capital just like a corporation would. Responses please.

Re: How to get great cash flows? - Posted by ROBERT BARLEY

Posted by ROBERT BARLEY on December 31, 2000 at 21:36:04:

How about a house that is in the price range of 45 to 55 thousand dollars in a blue collar older area of the city.
It is worth 70 thousand when cleaned up and rehabed a little (ie $1000.00 materials, and some do it yourself work). Advertise it on the market as Seller Financing, or Rent to Own. Expect 3 to 4 thousand down , and a positive cash flow of 200 hundred a month. Just make sure that you adjust the interest rate to make the numbers work, so that you receive 200 hundred dollars a month.That is just one of the ways we do it here in virginia.

Re: How to get great cash flows? - Posted by Dave Mckee

Posted by Dave Mckee on December 29, 2000 at 23:48:28:

You ae right. I was only liting some ways to get ositive cash flows. The oportunity cst makes a large down payment unproductive. I belive in leveraging as much as possible. If the deal is good enough, that MAY be enough to cmpensate for the additional cash outlay.


Re: How to get great cash flows? - Posted by wayne

Posted by wayne on December 30, 2000 at 08:28:52:

The only way I can increase cash flow is to buy as efficiently as possible then pay down my most expensive dept until I use it again for another purchase. I’m searching for other ideas.

Re: How to get great cash flows? - Posted by Dave Mckee

Posted by Dave Mckee on December 29, 2000 at 23:52:10:

Sorry about the typo’s on that follow up