Posted by Shawn J. Dostie on August 29, 2003 at 09:52:08:
I am in Coshocton, 1 hour southwest of Akron/Canton,1 1/2 hr east of Columbus. I currently have 2 duplexes, 1 triplex, 1 MH (took in trade on my prev res. which I L/C’d), 4 SFR, 1 Used car dealership, and the 3 residences that I have owned including my current house. In all of them, including the carlot and my residences, I have had to come out of my own pocket $3500.00 total.
Good enough in my book,
Good Luck,
Shawn(OH)
minimum positive cash flow question - Posted by Kristine-CA
Posted by Kristine-CA on August 28, 2003 at 18:06:34:
For you landlords out there: When I get calls from sellers with apartments/units I find that my ideas about cash flow make most of their asking prices why over the top. This seems especially true for low-rent units. I work in a mostly non-appreciating areas, and many of the rents are below $425.
What is the minumum positive cash flow you’d be willing to go for on low-rent units in a non-appreciating market?
I have a nine-unit deal that I can’t make work because I think I am being too conservative on the cash flow issue.
Thanks for any thoughts or ideas. Sincerely, Kristine
Re: minimum positive cash flow question - Posted by Jay (OR)
Posted by Jay (OR) on August 29, 2003 at 24:41:00:
It really depends on what you feel. Most of these guys say they won’t bother with something unless they get at least $100-250 per MONTH. Well, I purchased a 4plex for $150,000 last year. I was eating about $400 per month NEGATIVE cash flow. Sucks right? Well, here’s the catch. We were living in one of the units. Six months after I bought it, I got an offer for $200,000. But, since real estate prices have gone up so much, I rejected the offer because what am I going to do with $50,000? Spend it? No thanks. There certainly wasnt any better deal on the market, so I decided to stick with the investment. Well, I recently finished a refi, and am now breaking even (appraised at $235,000), AND still living there. Not only that but it’s allowed me to stay in school, and not have a j.o.b… And now, I only have two more terms of school before I can get my degree (to please the parents), and really get started on my investing. Just the thoughts of a 22 year old, so take them for what they’re worth. Hope this helps, Jay (OR).
Re: minimum positive cash flow question - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on August 28, 2003 at 23:49:06:
Kristine–(CA)--------------
My view is that most income properties being offered for sale are not good buys. So I would not be surprised if that is so for the property that you are discussing.
I can’t answer your direct question because I never think in those terms. I buy at the OK county tax resales, and I think in terms of buying at well under market value. Fortunately, there is some positive cash flow, after I get done fixing the properties up. It is a celebration day when my property managers start sending me money instead of the the other way around.
Good InvestingRon Starr*
Re: minimum positive cash flow question - Posted by Shawn J. Dostie
Posted by Shawn J. Dostie on August 28, 2003 at 18:44:29:
I buy $150.00 to $200.00 per unit, however in Ohio I can do that and not have a “great” deal. So on your 9 unit, I wouldn’t even consider less than $1200.00 positive cash flow including 10% vacancy and 10% maintenance. And if there is an on site manager, that would have to be figured too.
Good Luck,
Shawn(OH)
Re: minimum positive cash flow question - Posted by Kristine-CA
Posted by Kristine-CA on August 29, 2003 at 24:02:17:
Ron Starr: I agree. Income properties offered for sale where I am are over-priced. Sometimes it surprises me that the sellers don’t even try to doctor the numbers. The net sheets barely make sense or there are none at all.
But my offer was based on $100 per unit positive monthly cash flow (after PITI, 10% vacancy, 10% maintainence. I was curious if that was enough by other investor’s standards. Not enough for Shawn Dostie. Perhaps enough for me.
I’m curious about what terms you do think in. Surely when you buy at tax sale you are correlating the rents and the time/value of the cash you are using to buy and the money it takes to get the home rent-ready.
Is market value really an issue for the kind of buy and hold you are doing. Aren’t you looking for a certain kind of cash flow on your investment?
Sincerely, Kristine
Re: minimum positive cash flow question - Posted by Carl (FL)
Posted by Carl (FL) on August 28, 2003 at 20:28:17:
What % down payment are you putting down? And what are average rents in your area? Just curious. Most multi’s in my area have very low (7-8%) CAP rates which is the main reason I haven’t bought any.
Carl
Re: minimum positive cash flow question - Posted by Shawn J. Dostie
Posted by Shawn J. Dostie on August 28, 2003 at 21:46:44:
I believe in lots of leverage, though I have excellent income to offset bonehead moves. I make those returns by putting nothing, or close thereto by buying properties that need cosmetics and making the cashflow, and my tenants fix them up for me. A 1 BR is approx $325.00 mo., 2 BR $375.00, 3 BR $425.00 per mo. I pay approx 15-20k per unit multi, 25k-30k SFR.
Good Luck,
Shawn(OH)
Where in Ohio? - Posted by Tim_Cleveland
Posted by Tim_Cleveland on August 29, 2003 at 07:26:24:
Shawn:
Where in Ohio are you again? Dayton? Youngstown? Columbus? Here in Cleveland, even in marginal areas, $425 is probably absolute minimum unless you are in the real dumpers, rooming houses etc. Also $25K - $30K in Cleveland would buy you a boarded up, burned out crack house. And if you don’t mind my asking, how many units have you put together little/nothing down that cash flow as you mention?
Thanks,
Tim