cash flow positive?
- Thread starter RAJ
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20% or 0% are the standards most investors use.
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QUOTE (RAJ @ Jul 18 2009, 08:41 AM)
Any property can be made cash flow positive with enough down.
usually .. but not always ! Some properties are too expensive that even with no mortgage they don't cash flow ..
Example would be:
a) luxury properties: condo fees + taxes + management fees are so high they exceed rent, or
b) very old properties, i.e. deferred maintenance eats up all your cash-flow from rent, or
c) properties in such a poor location it is hard to impossible to rent, i.e. also overpriced !
QUOTE (RAJ @ Jul 18 2009, 08:41 AM)
How much down payment is reasonable in investor terms to consider a property worthy of the title "cash flow positive" after all expenses are accounted for???.
usually around 20% .. but some are more aggressive and cash-flow even with 0% or 5% down .. (many get burned later on re-finance or when the real expenses are figured in ).. and some are more prudent / long term thinkers and think 25% to 45% down is the right $ amount ! To even get a mortgage, in commercial real estate 30-35% down is the norm today .. and in multi-family it is 25% to 30% these days .. up significantly from a year or 2 ago !
Read this here on leverage with some crude guidelines:
Are you too levered ? http://myreinspace.com/public_forums/Real_Estate_Discussion/62-10823-When_are_you_too_levered_.html
and also making money in a FLAT or even declining market, i.e. equity gain not the only way to make money in RE: http://myreinspace.com/public_forums/Real_Estate_Discussion/62-10711-Equity_is_not_the_only_way_to_make_money_in_real_estate.html
Any property can be made cash flow positive with enough down.
usually .. but not always ! Some properties are too expensive that even with no mortgage they don't cash flow ..
Example would be:
a) luxury properties: condo fees + taxes + management fees are so high they exceed rent, or
b) very old properties, i.e. deferred maintenance eats up all your cash-flow from rent, or
c) properties in such a poor location it is hard to impossible to rent, i.e. also overpriced !
QUOTE (RAJ @ Jul 18 2009, 08:41 AM)
How much down payment is reasonable in investor terms to consider a property worthy of the title "cash flow positive" after all expenses are accounted for???.
usually around 20% .. but some are more aggressive and cash-flow even with 0% or 5% down .. (many get burned later on re-finance or when the real expenses are figured in ).. and some are more prudent / long term thinkers and think 25% to 45% down is the right $ amount ! To even get a mortgage, in commercial real estate 30-35% down is the norm today .. and in multi-family it is 25% to 30% these days .. up significantly from a year or 2 ago !
Read this here on leverage with some crude guidelines:
Are you too levered ? http://myreinspace.com/public_forums/Real_Estate_Discussion/62-10823-When_are_you_too_levered_.html
and also making money in a FLAT or even declining market, i.e. equity gain not the only way to make money in RE: http://myreinspace.com/public_forums/Real_Estate_Discussion/62-10711-Equity_is_not_the_only_way_to_make_money_in_real_estate.html
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RAJ what is YOUR definition/understanding of "cash flow positive".
What do you expect from a property in relation to your investment in order to arrive at a positive cash flow calculation..
What do you expect from a property in relation to your investment in order to arrive at a positive cash flow calculation..