I Wish I Knew THIS About Rental Cash Flow 10 Years Ago

[@CoachChadCarson]

Download my *FREE * _House Hack Spreadsheet Analysis Spreadsheet_ at www.coachcarson.com/househackanalysis

[@ciclurieconomice8494]

[@williampalmer7026]

I did the same thing, coach. I bought a duplex that cashed flowed $350 a month (during covid). 3 years later and some renovations. it's cash flowing $1350 and has appreciated $70k more or less.

[@CoachChadCarson]

congrats! thanks for sharing. It's cool to see how a rental can improve like that over time.

[@HappyPenguin75034]

Cost of renovations ?

[@williampalmer7026]

@HappyPenguin75034 about $15k more or less

[@Matt-qj6cr]

Thank you, Coach Carson, for this video-it’s exactly what I needed. I bought properties just before interest rates went up and scaled quickly because all the gurus said I needed a lot of rentals. In the beginning, cash flow was great, but rising inflation, taxes, and insurance have since crushed that, leaving me with negative cash flow. It’s been incredibly stressful, and honestly, depressing at times, especially since most real estate content only focuses on the good times and positive cash flow, never the tough moments or what to do when things go negative. Watching this made me feel a lot better and helped relieve some of that stress. I really appreciate your balanced perspective and advice!

[@rubengonzalez-qk6bx]

Hola coach, I been watching your videos for over a year now and enjoy every single one. I’m from California L.A county not L. A city. I began in 2014 hacking own 2 duplex and single family home. I appreciate all you do…

[@CoachChadCarson]

thank you for the comment and for watching my videos, Ruben! Congrats on your house hacks!! well done!

[@OldGuyREI]

Thanks Coach I'm going through this right now. I needed to here this.

[@CoachChadCarson]

You're welcome! I also make these to remind myself! lol.

[@OldGuyREI]

@CoachChadCarson i hear you. We're 3 yrs into our second attempt at REI .going much better this time thank goodness we had reserves this time. Hope to see you in vegas again this year.

[@robertwilliams8887]

Very good content. Another thing I like to remember is investing for equity growth and not necessarily cash flow at all. I reread Millionaire Real Estate Investor about once per year and recently decided to refinance all of my properties into 15 year loans. My principle pay down on each property basically tripled while being able to get a lower rate. Little to no cash flow, and I’m even mildly cash flow negative on some and having to supplement using my W2 income, but from a pure net worth perspective I’m gaining equity much faster. Cash flow isn’t everything, especially when still in a “builder” phase.

[@CoachChadCarson]

Thanks for watching and the for the comment. You're right - a rental owned for growth is a lot like a savings account - the debt pays down and the price grows. It works well over time! I understand why the 15 year mortgages make sense. And as long as you can afford the mild negative cash flow it works. I'd personally still prefer to do 30 year loans and apply all the extra cash flow towards one loan at a time (debt snowball). What I lose in slightly higher interest rates I gain in cash flow flexibility and quicker path to getting one or more properties free and clear. I made a video about the approach here: kzbin.info/www/bejne/lZm4eqKBa7Wtbassi=0L1Ke2IuuWcDHXvg

[@triktrak_1451]

Great, densely-packed info, Coach. Always worth watching your vids to the very end.

[@AndrewAllenHomeExpert]

I bought two duplexes in 2021 that cash flow $150 a door. They now cash flow about $400 a door.

[@dolamite22]

I have gone through these cycles, and regularly question my strategy. This is outstanding content! Thank you!

[@johnmurraycompton569]

Hey Coach, this is exactly what I needed to see and hear. I have 3 doors in Summerville, just outside Charleston. The oldest of which I'm 4 years into. At times the negative cash flow has made me question my choices. Zooming out, I do see things improving. I’ve also been considering cashing in some other investments to do a recast on one property (pay off if can) and using the newfound cashflow to accellorate de-levering the other (duplex). The biggest reason for me getting into the rental game was to add stability/a safety net since my career is as a small business owner. Hearing the example about your student solidifies this decision for me. Thanks!

[@CoachChadCarson]

thanks for watching and for sharing your experience, John! I like your plan with the recast mortgage and quicker pay down. Let me know how it goes!

[@johnmurraycompton569]

@@CoachChadCarson thanks - will do!

[@HappyPenguin75034]

You can’t go one off. Total amount invested? Total cash flow each month?

[@Ahmed-b3t3k]

Thank you for these information and I have a question What type of loans do you use?

[@markwegner6100]

I've lived it, & even Grant Cardone agrees that you can plan for cap ex, but once every ten years or so, all of your cash flow goes for expenses. Not a deal breaker though.

[@CoachChadCarson]

Big picture it works out. but those big capex payments are a shocker to the bank account in the moment!

[@andresmattos7541]

A video like this just when i was felt lost is a blessing! thank you coach!

[@CoachChadCarson]

Glad you enjoyed it! Thanks for watching.

[@cwall216]

Thanks for sharing things from a different perspective

[@Build2RentTexas]

So good, I have listened to it twice.

[@Mircea-kp9gc]

Thanks Coach! On my second unit, the exact thoughts went through my mind.by the time i bought it in September, and making it ready, the market weakened her in NC. I have reserves, but I dont want to use them :)

[@CoachChadCarson]

Short-term rental markets can soften up. I've had to lower rents sometimes to get it full. But then you can raise them back up over time with current tenant or as it turns over next time. Good luck!

[@methodicalcuts1252]

Solid, solid content, Coach.

[@CoachChadCarson]

thank you for watching!

[@INTJdre]

Great video!

[@Build2RentTexas]

Great video and deeper discussion. Enjoyed!

[@CoachChadCarson]

Glad you enjoyed it! Thanks for watching!

[@Jfandango]

Great video, thanks Coach!

[@Bill-x5r]

Thank you

[@healthykidsbooks]

keep up the great info vids

[@leeroach3381]

Very helpful Thank you for sharing this

[@AllNighterHeider]

Thanks Coach

[@Sicwkskxkckckzd]

How can you cash flow? If you only put down 20% and interest rates are between 6 to 7% right now? it doesn’t make sense. The only thing that makes sense is equity but it’s very depressing If you don’t cash flow. Let’s be honest.

[@CoachChadCarson]

In many cases you have to put more money down (30-40%.) to make it cash flow positive. Or get creative (cheaper) financing. I made a couple of videos explaining: 1. kzbin.info/www/bejne/lZbSqoxjqtRgj9E 2. kzbin.info/www/bejne/rZSwfGCkZZeAfLssi=fB5FXvE7ABQM3bZB

[@cgsonic1968]

I'd put the money on a money market or something that keeps the value of the fiat.

[@clintoncoker4318]

Coach , I’m a mega fan of yours and Zuber ORAAT. What would it take to have a 30 min conversation with you via zoom , sir?

[@CoachChadCarson]

Thanks for the message and for following along! I'm doing a Black Friday special for coaching at coachcarson.com/bf24yt That's the only place I'm doing any coaching right now.

[@AllNighterHeider]

Your best bet is to attend the ORaaT event in Vegas. These guys have dedicated their time to interacting with the crowd and are ready to chat. It's not zoom, but I think you'll get more out of it.

[@CoachChadCarson]

@@AllNighterHeider Agree. Awesome group with Zuber and others.

[@dropoutandretireearly1781]

PAY THEM ALL OFF 100% !!!! LOL !!!!! I ALWAYS SAY THAT THEE ONLY GOOD RENTAL IS A 100% DEBT FREE RENTAL SO IT ACTUALLY PRODUCES SOMETHING !!!!! LOL !!!!!

[@williampalmer7026]

Thanks Coach!

[@CoachChadCarson]

thanks for watching!

[@christopher2926]

Great content. I am big fan of the what u teach; but please correct me if I am mistaken, Option #3 (pulling 260k) would be accurate as long as one property is paid off.

[@CoachChadCarson]

Thanks for watching and for the comment! No - it doesn't need to be paid off beforehand. But you DO need equity. In my example, the two properties were worth $325,000 each, and I owed $130,000. So, I refinanced one of them (property #2) for $260,000. $130,000 went to pay off the existing loan on this property. The other $130,000 paid off the loan on property #1. Same amount of debt, just now it's all on one property instead of split between two. Hope that helps!

[@christopher2926]

@ ty

[@HappyPenguin75034]

@@CoachChadCarson why? Interest rate? It costs money to get a loan.

[@timharter77]

Hey Coach! I am enjoying your videos and I like your strategies. I just started a few years ago and I have 2 condos which I think are quality units. I tried to use my networking skills to find responsible tenants that are "low stress" because I also have my full-time job which comes with a lot of demands on my time. So far, I haven't had any turnover. I am curious what your opinion is about giving a tenant a good deal on rent or maybe not being as agressive on rent hikes over the years in exchange for keeping a rock-solid tenant. Thanks!

[@HappyPenguin75034]

It’s business. Don’t be greedy. What’s your net cash flow?

[@donniebaer1992]

Coach, one question, my accountant said I can’t write off my mortgage payments on my rentals. Is this true? I feel like I’m paying taxes on all of my rent if I’m can’t exclude my mortgage. It’s zero interest seller financed on 2 rentals

[@CoachChadCarson]

Ask your accountant about imputed interest. The 0% seller financing notes I negotiated had to be reported as if I paid interest using the applicable federal rates (www.irs.gov/applicable-federal-rates). That would also allow you to have some write off for interest.

[@Not_Mussolini_]

It would be worth your while to consult another local accountant. It could save you tens of thousands if your current one is doing it wrong.

[@Jfandango]

You should be able to write off the interest but not the principle pay down.

[@KalS691]

Good video. What LTV do you recommend on your rentals? 75%? 50%?

[@CoachChadCarson]

When you start, 75-80% with long term debt is probably ok. As prices grow ande debt amortized it naturally gets closer to 50%. In mature (harvester) phase I like more in the 0 to 25% range (I'm closer to upper limit of that).

[@KalS691]

@ good insight. May be a good video to walk through how you understand LTV over time. This is where small and mighty works best. Can pay down debt faster and become a cash flow machine 💪

[@ian9113]

I'm wondering though if putting 100k down now to keep 700 a month is worth it though. takes almost 12 years to make the 100k back. it's an 8.4% ROI, surely reinvesting in RE would be better? Wouldn't the stock market beat that on average also?

[@CoachChadCarson]

it's not a purely ROI decision. It's a Return-on-life decision in this case. It's for someone who already has wealth and wants to increase usable cash flow and decrease risk. Plus, I don't know any investments in the stock market that have zero risk and pay 8.5% (especially not in dividends). That's essentially what paying down debt in this case does. It actually reduces the risk while paying you 8.5% on your investment. I love investing in stocks, too. Not an either/or decision for me.

[@rubayyatkhan]

Good content but overall taxes and insurance go up.

[@CoachChadCarson]

@@rubayyatkhan true. But so does rent. And if your mortgage cost is fixed, cash flow tends to get bigger and bigger.

[@JM7Blocks]

And maintenance and repairs also go up

[@CoachChadCarson]

@@JM7Blocks yep. In a good market the rent goes up enough to cover increases in operating expenses (maintenance, taxes, insurance, etc). But if rents go flat or down, cash flow could get worse.

[@585numbnuts]

Wait so you didn't put it in a High yield savings account?

[@CoachChadCarson]

I did put some in there. But my business accounts were at lower interest. Since then we've negotiated with our bank to get higher rates, which has helped.

[@585numbnuts]

@@CoachChadCarson How long do you generally wait before moving around rent payments?

[@CoachChadCarson]

@@585numbnuts all of my rents go into one account that I also use to pay operating expenses and mortgage payments. But as excess cash flow accumulates, I'll move it out monthly or quarterly to a separate savings account.

[@FreshAirRainbow]

🔥🔥

[@justinrees2400]

Here’s a wild idea, don’t leverage the entire property value into the mortgage. It will give you much more breathing room. Heck, it may even allow you to offer a more fair rental rate instead of punishing your tenants.

[@CoachChadCarson]

Unless someone is brand new and house hacking (living in the property), I don't think it'd ever make sense to leverage the entire value (for the reasons you said).