This is the kind of deal I do when buying for cash flow. I just did 4 duplexes for $40K each that rent for $400 each side in Waco, Tx. I recently did a duplex in Killeen that rents for $250 per side and the total cost including rehab was $22K. The appreciation may not be the best but it will make money while it appreciates some over time.
an earlier poster mentioned a 1% formula for establishing good cash flow. could you explain this to me as i’ve never heard this formula? is it exactly what is sounds?
a little over a year ago we bought 10 units for 310,000. Our lowest rent is $375.00 our highest $550.00—problem we are still having difficulties w/ cash flow. we are able to make our payments but it seems we are being nickle and dimed to death.
i just purchased soft ware to help me differentiate our rental properties to establish if it is infact this property or another.
in a year and a half we bought the above, then a triplex,duplex and house as a package deal, then a 7 unit, they are all on the same block so it seemed convenient…the problem is my husband works 70+ hrs. at his job. I own a seperate business and have 6 kids so needless to say I always have a time crunch. We are also rehabbing a 3 unit bought at auction.
We have an onsight prop. manager who does well…not a lot,
okay, just answered my own questions. I guess its time to fire the “property manager” and hire a property managment company.
I’m rambeling but back to the question, if we are renting our units out for more than 1% we should have a decent cash flow? I’m not ready to give up yet!
Thanks for any advice.
Our current property manager gets free rent ( about a $550.00 ) value. In your opinions, what should his duties include? Maybe I expect too much.
The 1% rules is a SWAG (a "Scientific Wild-Assed Guess)…some places it just doesn’t work because of high taxes or high insurance, etc…it’s kinda just an “in your head” kind of calculations…
But, if you have 10 units that average over $400-something a unit and you paid $310K you should be cashflowing pretty well. Your taking in over $4K a month and your payments should be about $2K-2,300 a month, I don’t know what your taxes, insurance , maintenance, etc are, though…I will say that if your manager is living rent free (in a $550 apartment), you could get 10% management based on $5,500 a month in income (and we’ve already established that the high end is $550). You’re probably over-paying him, especially if his level of support is lacking.
There are a lot of variables but there is nothing like doing a line-by-line analysis of income and out-go to see where the problem(s) are…