Right now the real estate market is hot. Everywhere you see in the news about how prices are rising and homes are selling quickly. It's true – and if your a homeowner and you are looking to sell – then right now is a great time for you. However, right now I am working with several clients to help them find a great property to invest in. These buyers are ready to deploy some cash and would love to build up their portfolio of real estate.
There's just one problem
Nothing on the market is cash flowing right now – at least not to the tune that my investors want to sing to. In my city, the average home cost about $220,000 with the average rents for $897/ mo*. You don't have to be a mathematician to see that the gap is wide. This also equals 4.8% cap rate which is inaccurate because it doesn't even account for expenses – if you follow the 50% rule then you see that your income is not $897 a month, but reduced to $448/ mo which brings your cap rate even further down to 2.4% - not really even worth getting out of bed over.
So what will it take to find a cash flowing property?
Perseverance is a major factor. You have to be scouting the market every single day looking for opportunities to jump on. I check the MLS ( Multiple Listing Service) where homes are listed each day – to see if anything new shows up meets my criteria. I call up my wholesalers to see if they have anything they are working on. I check with my property managers to see if any of their clients are selling anything, I write down addresses of boarded up houses to see if I can contact the owners, and I continuously build my network of investors so that I have a better chance of getting a phone call when someone has a deal to share.
If you read the local news, you will see that Fresno, where I live has been “recovering slower" than the rest of the country – but ask any local investor they will have a different story. Those who live and buy here know that prices have been on the rise for the last 5 years and inventory is lower than ever with prices starting to approach pre 2006 levels – what this means for investors is that we need to be keen when it comes to finding deals that work. The best deals are going to come from your network of people, which means that you need to take the time to cultivate a following of investors who will call you when they have properties to unload. I suggest going to a local real estate meetup group – and if there is none where you live then start your own.
Properties here and other places will cash flow with positive income. When I say cash flow – I mean that you are earning at least 4-6% from the investment- anything less than that and you might as well be investing in bonds. However, it just takes more work to find the deals and you have to be ready to strike when the iron is hot.
Are you finding cash flowing properties in your area? If so - what are you doing to find them? Comment below and let us know what your strategy is for finding cash flowing properties and get out there and start networking, spend more time looking for the deals, and be sure to check every day for anything that might be a good deal.
Please be sure to check out my others articles on real estate, investing , and cryptocurrency ( and some other random dog stuff)
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