Has anyone done a deal that works on Long Island?
I am driving myself crazy trying to find cashflow? What tools do you use to determine cashflow? I have been trying to use this:
Welcome back JP! I thought you had gone the way of the masses! Glad to hear that you’re still in the REI process.
Using a cash flow “tool” is pointless. The numbers are very simple and using anything more than a handheld calculator and sticky note is overkill. I think that you already know the answer to this question, but the formula for cash flow is to subtract the mortgage payment (P & I) from 1/2 of the gross rents. It’s just about that easy.
Unfortunately, knowing the formula doesn’t mean that finding cash flowing properties is easy. It may be all but impossible on Long Island. If so, don’t do it. Have you ever thought of moving?
It’s FAR better to want a cash flowing property that you can’t find, than to have a negative cash flow property that you don’t want!
Good Luck,
Mike
Yea I’ve thought about it, but its pretty much out of the question, my job here is too good…Doesn’t that formula lack tax advantages for cash flow? Can you provide me with an example of #'s that work?
JP,
The formula does not include depreciation, if that’s what you mean.
Plug any numbers into the formula to see what numbers will work.
Mike
JP,
My bro recently moved from Brooklyn and it seemed his only true real estate investment strategy with less than $1.5mm that worked was for appreciation. He did well even after holding properties less than 2 years.
I’ve had some success employing a hedging strategy, whereby, I invest in proven cash flow markets (Indiana, Texas to name a couple) to offset my negative cash flows in other markets. It’s not a new approach, but a necessary one especially if your real estate is in California or New York. There are still several very good markets that for a $110k investment on SFR are returning $300 a month net cash flows. Net, being cash after property taxes, insurance, management fee, HOA, and mortgage payment with 5% down.
Good luck
H