Hey friends,
I’m curious how you more experienced investors are cash flowing properties these days. It’s very hard to buy and hold and keep the cash flowing the way I used to.
It’s very difficult to refinance out equity on NOO properties. And with all the new legislation is making it harder for buyer’s to get new financing–especially with the elimination of Nehimiah to help with down payment challenges.
Other than flipping, how are others maintaining cash flow?
Jimbo
Hmmm.
The complete lack of response is not encouraging.
Perhaps none of us are cash flowing? Even on a flip, you’ve got to get your buyers qualified.
Lease Options? Well, that’s fine for getting people into a property. But most of buyers typically have a couple thousand dollars to put down–not the $10K plus I’d like to see (still less than FHA’s 3% BTW).
With even FHA getting difficult for many buyers to qualify for, how is anyone moving flips?
buying right
free and clear properties
subject to’s
wholesaling
the hard part is staying focused
Well, those are types of deals.
But, how do you cash flow? Business is about cash flow. And it’s getting very difficult to cash flow real estate–from flips to lease/options. Equity is easy. Cash flow is not.
It’s getting very difficult to finance buyers, making even flips difficult. I deal with lower price-point homes, and consequently first-time homebuyers. They typically have very little down payments and even less credit. So, even with my preferred lease-purchase (lease/option) exit strategy I’m not getting cash flow from the down payment.
I used to rely on refinancing my equity with inexpensive lines of credit from the retail banks. However, they just aren’t doing those anymore… at least not the way they used to.
My only other option lately for getting cash for equity is to get down payment assistance money from the state. However, the down payment assistance has tightened up as much or more than the banks.
So, anyone have a great ideas (or source of good non-owner occupied home lines) to cash flow your deals?
JimboJR
Have you been able to find and use private lenders? If you have some houses that are free and clear (or at less than 50% LTV) , you can secure funds from a private lender with good terms. Check out the systems by ron legrand or alan cowgill for more info
New to the forum–interesting comments. . .
We are very, very conservative. Bought my first property 21 years ago. Refinanced once to get better terms, that’s it. Now paid off. I’ve always been happy with a profit of $50/month . I now have 200 units. You can do the math. My cash flow is great. Some years better than others. It’s to be expected. I always expect the worst and live accordingly. After all, my r.e. property taxes are $50,000/year. Real estate has been good to us. Bank now just gives us “portfolio” loans when I need a loan. But I actually try to pay cash when I can.
Point is–never refinance to buy “toys”–just more real estate. Do your homework. Don’t get emotional. Good cash flow almost always follows.
Buy ugly houses or foreclosures at 50-60% ARV with hard money, do a few repairs, yourself if you can, then cash out refi at 80%. There is usually some cash left to take out. Then rent out the property.
Granted the hardest part for me is finding the right house and not being out bid by other investors.
The rent is usually a couple of hundred more than the note in my area.
Hello again.
Thought I’d follow up here.
While I really don’t see the answers I was hoping for, I do see three ideas prevailing in these responses, which I’ll now address as not really giving me insight I need to continue on in the real estate business. Here they are:
Cash flow comes from:
(a) Selling
(b) refinancing
(c) renting/leasing
Let me tell you there are plenty of people who are equity rich and cash poor out there. Just look at the elderly who live in free-and-clear houses who can’t make ends meet. I see it all the time.
Buying right <> cash flow. I can find “deals” with equity. Wholesalers call me with 45% ARV deals because they can’t find their own buyers to put in them.
Buying right = equity. Selling right = cash flow. Selling right now is the best solution.
The problem in this market is about putting people in your properties who can qualify to buy and can get financed. This is getting harder, not easier, with the ongoing credit crisis and lack of confidence in not only real estate market, but all the markets as we head towards recession.
If anyone has a different experience or good source of inexpensive cash-out refinancing on NOO’s in FL please let me know. That’s the kind of answer I was hoping for.
Buying at $.30 on the dollar is not a deal if I end up with a property that I can’t sell for 12-24 months. During that time I have very high holding costs and very negative cash flow due to soaring taxes and insurance. I know you guys might think I could sell it at 70% of value and it would sell quickly . But I’m telling you that even the wholesalers around here are having difficulty moving stuff at those discounts. The problem is this credit crunch. No financing means no cash out, which means no cash flow.
No cash flow means no business = can’t pay bills = bankruptcy.
Bear Sterns, CountryWide and WAMU had plenty of “equity” on their books. They just couldn’t borrow on it to finance continuing operations until the markets turned. They are forced to either sell off assets to cover cash at ridiculous prices which kills their stop price or declare bankruptcy. Of course, they have the 3rd option of running to the Feds for bailouts–an option you and I don’t have.
So, thanks for the input. However, I’m still looking for better ideas on how to continue in this business today and still generate significant cash flow.
If anyone would like to contribute an better answer, I’m all ears.
You say buying right is not the answer. It is the only answer. Buying right is not only equity. I fact equity is a none-issue. Any idiot can buy and capture equity. Appreciation is not in your control so should not be factored in (it is like air you get it without effort). The only factor that makes it worth the work is cash flow. When you are evaluating a property you have to look at what the neighborhood rents for and how much your payments are going to be.
When real estate agents show me properties, they talk about location, size color of carpet area etc. All I look at is the cash flow potential. A house that cash flows will almost certainly have equity and appreciate and all those other things. It is like getting a wife. If you get one that is smart, good looking, good moral fiber good family orientation, etc then looking for one that is a woman is not even on the list. It is a given.