Paying retail $ for SFR rentals

Hello: I have gone through the route of trying to buy fixer-uppers at the standard 70% of ARV minus repairs and have had zero success at it. I can’t even get banks to nibble at some of my offers for some of the garbage they are selling as REOs.

My question: has anyone had success at buying move-in ready “bread and butter” single family houses and paying at or near FMV for them? Even with “buying down” the interest rate on a loan by paying a couple of points, I cannot come with a calculation that will yield a positive cash flow. If I consider the 10% management fee I would pay myself and the year-end interest deduction tax benefit, I still would break even or go in the red in terms of cash flow.

Does anyone invest purely for the appreciation and the gradual loan principal reduction from owning the rental? My investing career seems to be at a failing point.

Thank you for your response.

With much respect…
Get to flippin work !! The question should be…what should I be doing with all the motivated sellers that keep calling me to take their problem property’s off their hands?
What does your advertising program look like ? How many offers do you make in a week? How much are you paying your bird dogs? How many realtors do you have on your team ? What are YOU doing to make your phone ring with motivated sellers? How many signs do you put up, How many leads do you get from your TV commercials, are you renting the vacant sides of buildings with your I BUY HOUSES sign ?Adds in the paper?

Dear “flippin”
With the exception of paying for television advertising, I have done all of the things you mention. I am not sitting on my ass waiting for dollars to fall from heaven.
The question remains: can property be purchased at near-market value as a viable investment with the conditions detailed in the original post?

Unless you can raise the rents high enough to make it cash flow, it is very difficult to buy rentals at market value and make them work. Unless you have a substantial down payment.

If you are looking at it differently and holding for appreciation and can swing being in the red for several years it’s possible, but incredibly risky.

Why is it that you can’t close deals on the fixers? Is there a pattern you see happening?

If you go the rent to own route, you should be able to purchase homes 10%, even 20% under retail no problem and cash flow positively without the hassle of managing them the same as straight rentals. Buy at 10% under market, 0-5% down, sell on a rent2own program at 10% over retail (for 24 monthss…appreciation of 5% figured in). In my area, each one of these deals goes for at least 20k profit in 18-24 months…1031 exchange, repeat. It’s the get rich slow approach. A good realtor can find these properties no problem. So yes, you can cash flow at or “near” retail.

well said mw…it just comes down to how much u want to make…you seem to have the plan hehe

like i said this is going to be the holding time,not kickass appreciation we have seen in the past…

10-20k profit deals are ok with me … sometimes i would have a rehabber friend get it up to par…he takes his cut etc,u need a great relationship with your rehabbers…i’ll pay a rehabber a great profit if my numbers work in the property…he can count on me,

that was my game plan 20 years ago…i think its repeating this cycle now…holding time…

REO are very good deal at times…

make sure u check the rents,

my 2 cents

Robert A. Doncaster, Jr.
Import/Export Entrepreneur & Investor

Chicago Illinois USA
& sometimes Salzburg, Austria