How much should my rental property cash flow? | Real Estate Investing

[@ChandlerDavidSmith]

What cash on cash return are you buying at?

[@matthewconner463]

I’m on under contract On a 4 plex property in Las Vegas Nevada now $400,000 as asking price Putting 30% down payment It’s renting at $900 a month each unit is this a good 💰CASHon CASH 💰 RETURN. ?? Chandler

[@ShihabPersonalFinance]

@@matthewconner463 put the minimum down payment, also your monthly expenses isnt mentionned, but lets say it's about 2k a month, then yes thats a great return

[@anthonydooley224]

I can get 20% COC very easily.

[@ChandlerDavidSmith]

Anthony Dooley nice! Where?

[@buzzman17]

North Braddock/East Pittsburgh can usually still find 2-3 bed SFH for 25k in not war zones, 5k reno, rent for 700/month. Tax and insurance about 1,700 so pre-maintenance still north of 20%. I always hesitate to include repairs, vacancy, and mgmt costs bc people run their biz different. But very little price appreciation in east pgh.

[@brandonnguyen1884]

Those eyes at 0:39 really peer into my soul! Anyway, thanks again for the explanation in the video! I noticed in your description box you said that you would have a link below, but I don't see it. I assume it directs me to your site, but unfortunately, it is not there. Also a small critique is your description in the description box. You wrote, "This video" quite a few times in the paragraph. Other than that, I look forward to the next video!

[@ChandlerDavidSmith]

Brandon Nguyen thanks man! Truth be told I don’t put hardly any time into the description when I probably should. The link should be in there now but here it is. Thank you for the feedback! kzbin.info/www/bejne/p6i2aZaDa56AgMU

[@Mark-qj5kp]

Chandler - I've learned more from watching about 6 of your videos than from any paid resource I've tinkered with for education. Love the straight-to-the-point input - thanks for dumbing this all down to the fundamentals!

[@GYLTLLC]

Thank you for the info 🙏🏽 Super helpful.

[@robc6310]

Cash flow is king... but know and understand your numbers! This is exactly how I look at the numbers as well. Great video!

[@ChandlerDavidSmith]

Rob c love it! Thanks for watching!

[@JamesHollowayYT]

Cash = TRASH. Cash flow = KING!

[@GrowthePiggyBank]

Not just home prices but rents can also appreciate higher faster in the right locations. It might not cash flow today but at the right location, it can cash flow extraordinarily well in a few years. I wouldn’t just look at current rents but understand ur market really well in anticipation of the future.

[@ChandlerDavidSmith]

Grow the Piggy Bank that’s one way to look at it. I would much prefer to find value add properties that I can get rents up immediately rather than wait for the market to get them up for me. It’s just a much less vulnerable position to be in.

[@fabfoz]

I agree 100% locations and trends are a hige factor

[@christruex8258]

What number should I look at if I'm paying cash for the property

[@7ssenchokr604]

Shouldn't you add the principal payed on the house?

[@obstinatejack]

at 5:25, i dont know if you said it wrong, but if your friend told you he's investing 25000, and brings in 2500 cash flow a month, and not a year, then this deal is making 100% cash on cash return

[@ChandlerDavidSmith]

obstinatejack ha ha, I said it wrong. I clarify myself right after but my bad 😬

[@obstinatejack]

​@@ChandlerDavidSmith hi, thank you so very much for putting up all the videos, because i have learned so much from you. i recently got back to the states from living abroad for an extended time, and it's been really helpful to be able to learn from you how to navigate in the real estate market. you have an awesome day, and keep up with the good work. looking forward to seeing more of your super helpful vids.

[@ChandlerDavidSmith]

obstinatejack thanks so much!

[@tulio3571]

Hi there, why use leverage when buying? Thanks

[@ianscianablo8507]

Time: 424. In that example you mean if I actually put down $ 100,000 down as a down payment?

[@eannsingh]

I like the idea. Above 10% seems very good

[@ChandlerDavidSmith]

Personal Finance with Eann thanks! Glad you enjoyed it!

[@ChandlerDavidSmith]

Dra O couldn’t agree more!

[@mattchavez26]

This was the simplest explanation I have ever heard on how to Determine your cash on cash return.

[@ChandlerDavidSmith]

So glad I could help!

[@frankchaves402]

This is an awesome video you're very articulate. Please make more videos like this explaining how to calculate the numbers. You're better at explaining this than most of these KZbinrs. Thanks!

[@ChandlerDavidSmith]

Frank Chaves thank you so much! That means a lot! Will do!

[@jakethehitman-187]

I like these easy videos

[@gpzheng]

Great stuff Chandler. I like how you simplify things for most to understand and your energy is always on point. Keep up the good work, you’ll be big.

[@ChandlerDavidSmith]

I appreciate it! Thanks!

[@chriswhynder8311]

is that 208 before or after taxes ext?

[@oldcomputer6785]

Great video Chandler, I always appreciate advice from experienced investors. I"m almost certain your channel will blow up within the next few years, just stick with it! -Investor from Austin, Texas

[@miguelducasse]

Wow 7 years and got to your level good job champ 👌

[@bartg7790]

Why is cash flow so important? If the tenants are paying off the house, isn't that good enough? To buy an entry level home in Alberta (as rental property) I would need minimum $80k down on $320k home. I would probably get only $1500-1800 renting the main floor, so I would need to build a legal basement suite to get it to cash flow, but at that point I've put in over $100k and will get nowhere near 10%. Also, what are your thoughts on basement suites?

[@ChandlerDavidSmith]

Bart G you pull less rent in a basement unit. If you are renting it as a separate unit it still can be a good situation. If you’re just asking about adding on the suite and keeping it as one unit then it can work to add value but it totally depends on the property. When it comes to finding cash flow I just always believe if you look long enough you can find a deal that provides you with both! Obviously in a competitive market you’re not going to find a home on the MLS that’s going to meet the 10% rule but that’s when you need to get creative

[@bartg7790]

@@ChandlerDavidSmith It would be a separate unit with it's own entrance. It would cost about $30k to build and should generate $1k/month in rent.

[@ChandlerDavidSmith]

Bart G I don’t know all the details but a 30k investment for 1k a month sounds like a good investment.

[@ajswital]

What are Sexpenses?

[@theMastrgamr]

Are tax deductions (property taxes, insurance, etc) counted towards cashflow?

[@PORTMIAMIMIKE]

This only works with 25% down?

[@syguzman5739]

6:25 - 6:32 Yes, gotta stay above the line

[@ChandlerDavidSmith]

Sy Guzman definitely!

[@jacksonclement3770]

I’m looking into buying a property, but I want to know how much I can charge for rent before I buy it. How can I figure out how much money people are willing to pay for rent?

[@99thalialove]

Such a great explanation on cash flow and cash on cash return!!! Love your videos!!

[@kezonmcneill]

Great info as always bro! Thanks for sharing.

[@mlee9049]

Hi Chandler, just found you on KZbin. What about closing cost?... You did not mention it. So, I'm assuming that it's not included.

[@ChandlerDavidSmith]

Mike L. I’m not sure if I mentioned it in this video but I usually tell people to try and get the seller to cover closing costs

[@ChandlerDavidSmith]

Mike L. Getting the seller to cover closing costs increases your cash on cash return because you need less money to get into a deal

[@mlee9049]

Hey Chandler, I totally agree with you. But from my own experience it can be hard to get the seller to pay closing cost in select and/or a sellers market. Do you have a strategy for improving the odds? Thank you for the reply :-)

[@jimdavis762]

I have an investment property in NZ that is negative by 12 k per year but has increased in market value $150 k in one year.

[@ChandlerDavidSmith]

Jim Davis interesting. Just make sure that the market value is true market value and not what you think it’s worth. Negative cash flow is a dangerous place to be.

[@jimdavis762]

Chandler David Smith pretty safe as i bought the house $100 k below registered valuation

[@ChandlerDavidSmith]

Jim Davis Nice! Just so long as you can actually sell it 100 K above!

[@fireknight673]

Exactly this is how you do it no wedge loans or bullshit you go for a wedge loan you have to paycheck more

[@alexanderkucinich3753]

Right now I have one door and I'm earning a 24.89% cash on cash return! I love real estate!

[@airlebron7467]

That's really high.. is this after paying alot of loan?

[@mikeleuchs1326]

Where is the property?

[@alexanderkucinich3753]

@@mikeleuchs1326 Mid-Michigan

[@danijcruz]

I'm in Michigan let's connect!

[@alexanderkucinich3753]

@@danijcruz Sure thing! DM me. I'm about to close on my third deal.

[@Dsok0314]

I’m def getting more than 10% Your explanation really explains it all!!! Thanks

[@ChandlerDavidSmith]

Dsok0314 thank you! Glad you found it helpful!

[@JamesHollowayYT]

Yes! I'm actually getting 40% CoC on one of my rental properties! 15k into the deal, and I cash flow $500/mo. I currently have another property doing similar numbers! I actually talk about my experience and knowledge on my KZbin channel!

[@Ap32023]

@@JamesHollowayYT How do you jump to a second property or third property if our DTI goes up. Like how do you get another loan if you already have so much debt from the other properties. If you don't mind me asking.

[@protecttheweakdefendthestr8977]

I really appreciate you taking the time to help us out.

[@ChandlerDavidSmith]

Protect the Weak Defend the Strong no problem! Thank you for watching and commenting!

[@ricknovotny1474]

Great points! I hope more people start to learn about personal finance and investing!

[@ChandlerDavidSmith]

Rick Novotny thanks! Agreed!

[@JamesHollowayYT]

Exactly. I believe so many people don't understand or want to understand (because of personal limiting beliefs) about personal finance and investing!

[@melsonperos9566]

if i refinance my Rental Property and got back the money i paid for its DP does that mean my CoC will infinite?

[@ChandlerDavidSmith]

Melson Peros essentially! That’s a great way to go if your cash flow is still strong!!!

[@JamesHollowayYT]

Basically, yes! If you can pull out all of the DP, that basically means you have no money into the deal so your ROI is infinite. I actually talked about this on one of my KZbin videos as well!

[@stevenfoster9402]

Bro, your videos are so awesome and so content rich! Keep up the great work!!

[@JamesHollowayYT]

Right? I try to live up to Chandler on my KZbin channel talking about real estate investing as well!

[@zongyang4707]

easy explanation...Thanks..!!! I need to hear this.

[@ChandlerDavidSmith]

Zong Yang thanks you! Glad it helped!!

[@JamesHollowayYT]

Right? I try to live up to Chandler on my KZbin channel!

[@caroleehubbard8380]

Question, I have 2 single family houses and a duplex paid in full...one single family home I owe 69,000 still. I have been funneling all cash flow from all rentals into each property one at a time to pay them off. They have all paid off very fast, typically in under 3 years. Then I take a loan w/ HELOCS and buy more. I'm scared as hell to leverage like you do, I want to rid myself of mortgage debt as fast as I can. I know that's not suggested, but I want to quit my day job and use my cash flow to live on. I can't imagine keeping track of 60 mortgages like you do. Or does your property management pay your mortgages? That might be less stressful!

[@twincherry4958]

Does HELOC not have variable interest rate?

[@caroleehubbard8380]

twin cherry They do now, only variable ...my first 2 HELOCS were fixed, you (to my knowledge) can only get variable now. Sad!

[@twincherry4958]

@@caroleehubbard8380 That sucks...there are already too many unknowns and this is one that I do not want to deal with

[@believeimages6034]

Im buying negative cash flow properties because the market isnt going down in my area. Rents are stable but prices are still going up quicker

[@realestatetipstrickshacks9488]

Good Info. like

[@ChandlerDavidSmith]

Dennis Hopper Jr - Real Estate Tips Tricks & Hacks thanks!

[@Liwinmacmedia]

I bought a house 17500 I decide to fix the house and I have spend 45000, this house is it three floors, I fix the attic and make a room, fix the basement and make a room, I live right now in the second floor with my family and I have make clean every month $1100

[@SHerzlich]

When you factor in mortage costs, are you using interest payment only or a full amortization payment?

[@lil_bofo3103]

What if my house is paid off and want to buy a new residential property and rent mine out would that mean 100% cash flow

[@ChandlerDavidSmith]

No, you still have other expenses like taxes, insurance, management that will eat into your cash flow but it will definitely make your cash flow big but a smaller percentage return

[@lil_bofo3103]

@@ChandlerDavidSmith i totally get that i have those expenses but then that means i wont have the others so the return is above 80% correct

[@rosagaldamez6730]

Thank you so much for all this information .

[@cryptocrypto1249]

Nice!

[@caroleehubbard8380]

Whoa, this is "golden" info. I often wondered if I'm at a good rate of return, and with this info..I now know, yes I am! I purchased my last rental for 90,000 w/ 20,000 down, financed 70,000... Did 10,000 in renovations...so total investment (my $$) 30,000. Rents at $1000 per month, PM @10% commission (-100) PITI (-510) = $390 cash flow. So 13% ....not bad! Edit: oh and not sure if you count appreciations, but it now appraised at $180,000 ..so almost doubled in value since purchase date. Not sure if that plays into #'s

[@ChandlerDavidSmith]

Carolee Hubbard nice! That’s awesome!

[@MattZCanada]

can i ask which city your rental properties located at? I am looking to buy my first rental property.

[@caroleehubbard8380]

Matthew Zhu Morning Matthew, Tucson, AZ. But, the market is red hot right now...not the deals I got ... This described purchase was from 2014 and was a short sale. This house is now worth about $200K .. It would not be a good rental purchase if bought today. I have one more (a foreclosure) I bought in 2016 for only $50K .. But it was a mess and took about $65K to get it in shape. It is also now valued around $200K today. I have not bought anything since then due to the high pricing of homes in the area now.

[@MattZCanada]

Carolee Hubbard thanks for the reply. Yea the housing price is very high now but I think it will just keep going up. I watched quite a few videos recently and was shocked by the return for the properties in small US cities. Here in Toronto a condo will cost 600K+ (North York )and go for $2400 per month. I moved to Ottawa last year and it’s about $2000 per month for 400K property. I feel like in order to get the return in the videos I have to look into very small cities.

[@caroleehubbard8380]

Matthew Zhu True, if you are looking to buy in the US, try to pick towns that might have a good rental flow option. Here in Tucson...were a big retirement town due to mild winters...so we get a ton of east coasters and northerners spending their winters here + Tucson is the home town of the University of Arizona, big college town! Tons of renting via students. Some pretty reputable hospitals including a teaching hospital which traveling nurses and Doctors come here...so another great rental clientele. These are things I would suggest you look into when choosing your location to start your venture. You have to be careful, because if you buy too far from amenities i.e Shopping, schools, entertainment etc, you may be stuck with a small clientele pool and be forced to lower rents to get it rented. Just a few tid-bits of advice . Hope that helps, and good luck...I just love this rental thing....I'm close to being in a position to quit my 9 to 5 gig ... So exciting to never have to punch a time clock again.

[@matthewconner463]

CHANDLER I’m under contract with a 4 plex property In Las Vegas Nevada $400,000 asking price I’m putting 30% down payment renting at $900 each unit X4 units is this a Good CASH 💰 on CASH 💰 RETURN ????

[@ChandlerDavidSmith]

matthew conner that would mean you’re putting $120,000 down. I don’t know where your expenses are at but for it to be something I would buy you would need to be cash flowing $12,000 a year.

[@matthewconner463]

Ok Would it be a GOOD CASH 💰 on CASH 💰 RETURN Do the numbers make sense to you ?? On 💰💰💰CASHFLOW 💰💰💰

[@ChandlerDavidSmith]

matthew conner totally depends on where your expenses are at. Seems like a good deal! It will be close! Congrats on snagging it!

[@matthewconner463]

Ok thx 👌🏾 bud

[@allanulsby1433]

How would you run the numbers if I would live in a duplex. 250k purchase price, 20% down, 30yr term, 4% I rate, $1200.00 rent, $2500 property taxes, $1200 insurance, 6% vacancy. I have the lawn mower and no other income on the property such coin laundry. Trying to figure cash on cash

[@ChandlerDavidSmith]

Allan Ulsby The cash on cash on this property would not be good enough for me. Use this link and plug all of these things into the expel sheet and it will help you get your exact cash on cash. Hopefully this helps. www.chandlerdavidsmith.com

[@mlee9049]

I know you're living there, but is the rent for each side $1,200?

[@allanulsby1433]

@@mlee9049 Yes I would buy the place and live in the 1 side and try and get $1200 for the other side.

[@the_bearded_anesthetist]

When using your spreadsheet and inserting the taxes and insurance numbers, these numbers are yearly or monthly?

[@AreTrees]

okay... the plant his was hilarious haha

[@HawkingRegime13]

Absolutely excellent content here!

[@junkman2758]

Holy cow Batman. I just bought $45,000 house that rents for 625 a month with 10,000 down. So if I did my math right that’s like 27% $225 mo. On 10500 to rent

[@briansurfer8625]

Junk Man 👨 problem is in most cities a $45k house will be in an area that you’ll be lucky if you don’t have to do an eviction every other day.

[@ChandlerDavidSmith]

That’s a great return! Just make sure you’re in an area where you’re not dealing with a bunch of evictions or vacancy!

[@ChandlerDavidSmith]

Could be.

[@junkman2758]

Chandler David Smith thanks for the encouragement. Small town rule America.

[@junkman2758]

Brian Surfer thanks for the advice. Not in the city but rather rule area small town.

[@scottb4509]

my first property cost me $12,500 up front on a $115,000 property, including closing costs, down payment, renovations, etc. income of $1300/month. and cash flow of $600/month. I owner occupied one unit at first (back then my COC was at 30%ish) to swing the deal, then later moved and rented them all. It's cray to think that this property is now at +55% cash-on-cash property. nice easy calculations to determine value of a deal. good explanation.

[@TioFuan]

Thank you for the video.

[@Iceman514231]

Watch on 1.5x speed

[@CHRIStopher.C.V]

Is it normal for multi family units to ask for a bid before you can see it ?

[@garrettcraven9643]

Very nice video! Seems like this industry is getting more competitive, but maybe it’s just because I’m still pretty new to the game

[@ChandlerDavidSmith]

Garrett Craven real estate always has and always will be competitive but that doesn’t mean you can’t still find incredible deals!

[@mrkalenda4911]

How do you qualify to leverage ?

[@JM7Blocks]

Does your cash flow take into account tax savings from interest deduction?

[@ChandlerDavidSmith]

JM no. It doesn’t take in tax savings or principle pay down.

[@11BBILLYBOB]

With a mobile home to counteract depression of mobile home, When or what percentage should you be looking to hit to keep the deal worth investing in

[@ChandlerDavidSmith]

Jared Moote what do you mean?

[@11BBILLYBOB]

@@ChandlerDavidSmith generally appreciation is part of the benefit of buying a home, duplex or apartment. the monthly passive usually is 1 side of the coin but the depreciation is usually a major factor in not buying one. I was wondering when and where you would consider a mobile home as a good investment or is producing enough passive to make up the losses from general homes. (hope that makes more sense) Was wondering when you say it was worth purchasing and renting out.

[@TheGoalisSublime]

God bless you, thank you so much for sharing this knowledge!

[@ChandlerDavidSmith]

Afia Mensah thank you!

[@alex319217]

Shouldn’t CoC return also take in consideration of maintenance and capex reserve? Even if you buy a house with a brand new roof, there will still be wear and tear as time passes, so shouldn’t you deduct that monthly reserve to arrive at 10% CoC?

[@connorgurgone345]

Yes it’s factoring in all that stuff.

[@vega25transam]

💯💯💯

[@chartuck]

Nice work as always, bro! What's your opinion on Roofstock? Looking at a SFH in Jacksonville, FL for $99k in a 'meh' neighborhood (not good but not run down). Current rents at $1,100 which seems to be market rate so no room to raise. I'd put 20% down on a 30 yr Conv. After expenses I think I'd cash flow close to $400/mo, maybe even a tad higher. .

[@ChandlerDavidSmith]

bhs sounds to me like I great option. Just make sure you are in an area where you really can pull those rents and nothing crazy is going to happen with the market there.

[@chartuck]

@@ChandlerDavidSmith Thanks man!

[@LanierAquaticsporno]

Hey Chandler, I’m serving in the coast guard. Can you do a video on running the numbers with a VA loan (0 down)

[@ChandlerDavidSmith]

I’ve had a lot of people ask me to do this. Are usually just like to do videos and stuff I’ve actually done and I can’t get a VA loan. Let me look into it for you though and maybe I’ll do one. Thanks for your service

[@michaels9612]

@@ChandlerDavidSmith I think If you could tap into the active duty service member pool, you could get even more potential investors the confidence and willingness to pursue real estate. I am sure they would recommend your channel and what they gained from it to their buddies as well. - Just another active duty service member always looking to learn as much as possible with real estate and investing.

[@lustforlife_sp]

i’m in the process of closing on a duplex in Minneapolis using VA loan. let me know if you have any specific questions

[@charliefatcat5]

So he’s talking about ROI?

[@ChandlerDavidSmith]

Mark not necessarily, cash flow takes into consideration the loan payment as if it is all an expense. The true ROI takes in the consideration your principal paydown and your tax exposure decrease.

[@ChandlerDavidSmith]

Mark if you want this to make more sense you can go download my free spreadsheet at www.chandlerdavidsmith.com

[@anthonydooley224]

ROI and Cash on Cash are two different things. Cash Flow is after debt service.

[@ChandlerDavidSmith]

Anthony Dooley yes!

[@shirttechs4244]

We really in joy your Video's..My wife and I have a duplex that cash flows $700 after expenses..We also have a Town house that we live in with about $40k of equity in it..We would like to us the equity for a down payment to build a duplex with 3b3.5b on each side..Would it be best to refi or get a HELOC?

[@ChandlerDavidSmith]

That’s awesome! Thank you! If you are still cash flowing with taking the refi or heloc I would say go for it!

[@briansurfer8625]

How bout prepaid taxes, closing costs, and transfers taxes?? That adds a nice few grand to that down payment

[@ChandlerDavidSmith]

True! Unless you get them to cover closing costs!

[@nenadnikolovski1136]

You’re buying these old properties that you have to renovate yearly but you are concerned about 100$ cash flow monthly being a bad deal. Would you rather get 500$ cash flow per month but spend 5000 yearly renovating a beat up home or would you rather cash flow 100 per month on a new home being rented by a family and not have to worry about any damages or Reno’s.

[@Ditronus.]

Why 10% and not higher? I like that number too, but I'm on a deal right now where, if I sign electronically as we speak, I could get a multifamily deal that at best would be a 10.4% CoC ROI or at worst a 9.4%, all depending on what it appraises for (I'm offering extra in cash if it under-appraises). It's in a nice area, already rented out, and every major item such as AC, water heater, and roof, has been completely replaced in the last several months, so my risk is low. However, it's a big sum of cash required. At this point, I'm not sure what I should do. I could get a 9-10% return on a huge chunk of cash, giving me a cash flow of around $700 a month, but when you look at the opportunity cost of having that much into one property, I'm not so sure I should move forward. You ever run into a situation like this before? Potentially turning down a good deal that might meet your criteria just because a better one might be around the corner?

[@thewongmindset451]

Nice breakdown. Only thing for me is I’m getting nowhere near that in SF. Need to settle for 5-6% and even that’s not easy to find. But with appreciation and principle paydown its ridiculous.

[@ChandlerDavidSmith]

The Wong Mindset makes sense. Know your market and know your number. Sounds like you’re on the right track. Thanks for your feedback

[@MarioRuscovici]

Can you show an example please?

[@ChandlerDavidSmith]

Arthur Schwartz an example of what?

[@MarioRuscovici]

An example of how "its ridiculous" "with appreciation and principal paydown". Any property's cash flow improves if the mortgage is paid down. That is not cash on cash return.

[@ChandlerDavidSmith]

Arthur Schwartz I feel so bad but I’m having a hard time understanding your question? Would you be willing to rephrase it for me?

[@clarkewegener9197]

Hi Chandler! I just discovered your channel today. Great videos and great content. How about CoC when I renovate and refinance getting all my cash out. For instance…I paid $30k and put $30k into renovations. I finance the completed project for $65,000. After all expenses I still cash flow $150/mo. What do ya think?

[@danielgeorgiev388]

Do you calculate expected and unexpected spendings on the property when calculating future cash flow ? I mean if a roof need replacement in 5 years it could easily destroy 10 years of cashflow. Or even a water heater change could cost as much as a year of positive cash flow. What is your take to that ?

[@danielgeorgiev388]

I know that you are calculating 12% maintanance, but that definately won't be enough for any major renovation or serious problem in the house. Sometimes in order to be competetive in the market you should renovate or just take much lower rent, and that can happen in 10 years from the initial purchase never to be expected.

[@AceHardy]

💲🙌

[@ChandlerDavidSmith]

Ace Hardy 👊

[@dwaynewilliams9446]

Chandler I would love to have access to use your spreadsheet how do I do that where do I go to get it to analyze properties?

[@robertm6686]

🔥🔥🔥🔥

[@tomgillotti]

I've been so hyper-focused on cash flow ad my primary metric until recently I heard a BP podcast discuss how cash flow won't really get you anywhere. $200 a month won't make you financially independent, especially when you've tied up $25,000 to achieve that. Thoughts?

[@RichieD_21]

Its not just cash flow but also appreciation and equity when youre paying off principle on your loan every month

[@airlebron7467]

Well the loan gets paid year after year therefore the expenses lower and higher cashflow

[@aggarwalsaurabh8]

Hello Chandler, I am looking to buy condo as an investment property and came across your videos. I found it really helpful. The condo I am buying is 320k$ and I am putting 5% down and my total expense including HOA, Taxes, mortgage payment will be around 2300$ a month and I will be getting 2300$ rent every month. Can you please tell me if it is a good investment property?

[@StealthyCowbell]

Watch on 1.5x speed. You're welcome

[@TimothyGreve]

Intro music... LOUD. damn.

[@rogsolaris7411]

What if it’s also my primary residence? As in house hacking? Basically living for free with some cash flow, but not 10%

[@ChandlerDavidSmith]

Code Blue those are awesome! I would still run the numbers as if you’re not living in it and see what you can get because you will eventually move out and those are situations you want to hold onto after you move out as buy-and-hold investments

[@scottb4509]

when I house hacked my first property I essentially viewed my savings from not having to pay rent somewhere else as the same as earning rent from the unit I occupied. as long as you use realistic numbers it's virtually a wash. but with house hacking the COC is higher because of the savings you get from lower down payment, lower rate, lower taxes, etc. I've often said that house hacking is the best way a poor man can get into real estate investing.

[@rogsolaris7411]

@@scottb4509 Ok thank you for the perspective. In this particular situation my cash investment is more substantial with rehab and other factors, so the COC return even with house hacking in this case is still not great. But with a tenant I will be living essentially "free" month to month, and when comes time to sell I should recoup the whole investment. So unless I'm missing something it may be a wash but it's a worthwhile as my first project.

[@scottb4509]

@@rogsolaris7411 it sounds like, while it may not yield the best COC, it's the monthly savings you are looking for and that is definitely one of the perks to a house hack. Your appreciation and tax shelter savings will also be a benefit as well. All in all for a first property it sounds like it might be a great opportunity to gain some great experience and hands on perspective of real estate investing. And then you'd for sure know which route you'd want to take moving forward.

[@JamesHollowayYT]

House hacking is definitely the best way to build wealth for new investors! It's so powerful!

[@Immediately_]

Did you find better returns aiming for a 15% cash on cash return due to having such a high bar? Or are you finding that the larger number of potential opportunities opening up from looking at 10% cash on cash returns is paying better in the long run?

[@ChandlerDavidSmith]

I think you can always find the higher returns if you put in the work and have patience but the 10% Mark is definitely easier to hit

[@JamesHollowayYT]

Definitely agree with Chandler. Easier to find 10% CoC (cash on cash), but I would spend maybe an extra month or two to find a 15% CoC. Just depends on your personally opinion on what you want!

[@W2Capitalist]

That blank stare! Lol. Don’t let cashflow be the only criteria you use when evaluating criteria. Have a tripod of criteria and make sure the opportunity hits them all. Think of it as the bar stool of criteria. A 3 legged bar stool is a lot safe and sturdy than a 1 or 2 legged bar stool.

[@James-id5xq]

What about vacant, capital expenditures and repairs? I usually set aside 20% of rent for that. Don't overlook a new roof in 10 years or some kind of plumbing disaster can erase a couple of years of cash flow if you don't budget for it.

[@leftapple88]

I move every 2 or 3 years for work. How do I calculate a ROI after I move after a few years? (Keeping each of the houses i buy every couple years)

[@TheBloodVodka]

I am an American citizen but have loved abroad for ten years. I want to invest in real estate in 2020. I know that first I need to build credit which take half a year but I also need to show proof of employment for the past two years. How can I do this if I leave my job to return to America?

[@ChandlerDavidSmith]

TheBloodVodka that’s a hard question. Sounds like you might just have to wait it out and save money in the mean time

[@VIEWMARY001]

Is that because you expect the house value to double every 10 years? If not Why 10% then :)

[@chao6819]

This COC thing DOESN'T work in Bay Area or even Austin TX. COC is always negative these days (seriously, no way to be positive except mobile home). We invest in these areas to chase the appreciation, not COC. I'm totally comfortable with negative COC. Please correct me if I'm wrong.

[@CeciliaMarieAngela]

Why 25% down instead of 20%? You feel like the lower interest rate is worth it?

[@derekhiggs9943]

If COC only accounts for money made in first year versus money spent in first year, wouldn't the subsequent year's COC look a helluva lot more attractive, since likely you don't have another huge down pmt you're making that year? Or is the point really that 10% means it takes 10 years to get that money fully returned?

[@connorgurgone345]

No that’s not true. That’s not factoring in appreciation or principal down payment. So it’s more like a 25 percent because u can pull equity out at any deal. So it’s more like 4 years.

[@1993smiller]

only 10% cash on cash return??? Isn't that a little low? One furnace or 1 roof leak could wreck that return.

[@ChandlerDavidSmith]

If you’re not taking that into consideration when running your expenses you’re right. But this is with me running expenses over 20%. Probably something I should’ve mentioned in the video 🤦🏻‍♂️😜

[@ChandlerDavidSmith]

Dra O very true!

[@alden2826]

10% return a month or yearly return of 10%?

[@andrewfunk3128]

Clarifying question, do you generally include lender fees when calculating your CoC return?

[@ChandlerDavidSmith]

Andrew Funk yes! Definitely! It’s all part of your initial investment!

[@anthonydooley224]

Lender fees are part of your acquisition costs, but only affect year one of the investment returns.

[@rentwewoka2247]

I can't imagine someone investing a good deal of money only to cash flow $100/month. At $100 month you are basically going to be either breaking even or losing money when you figure in repairs, vacancies, taxes, and insurance.

[@ChandlerDavidSmith]

Rent Wewoka I’m very confused at what you are saying or asking?

[@rentwewoka2247]

@@ChandlerDavidSmith lol I'm saying $100 cash flow is not a good deal

[@Abunchaponys]

I believe you are forgetting you we getting equity in the home, appreciation aswell hopefully. But I would agreee I wouldn’t only want 100 cash flow.

[@rentwewoka2247]

@@Abunchaponys no im forgetting but I believe the video was about cash flow. $100 month cash basically means you are breaking even and probably even losing.

[@RicardoSanchez-jg5un]

What if I buy a 70k house with only 5k down at a 9% owner finance. Cash flows 100-160 monthly.

[@RicardoSanchez-jg5un]

1200/5000 = 24% CoC return ?

[@RicardoSanchez-jg5un]

I just don’t like the 9% owner finance.

[@airlebron7467]

Yes

[@Sheer770]

What if the property is $167,500 (bank loan), zero money down, the mortgage is $1151 and the rent is $1400. Is it worth perusing?

[@ThangGSB]

Where do you buy to get 10% CoC return? I live in CA and that's basically non-existent. I'm investing out of states, but definitely couldn't find a place that would do 10% CoC return.

[@ChandlerDavidSmith]

They are all over. But probably not in California.

[@ThangGSB]

@@ChandlerDavidSmith yep that's my dilemma. Anyway, how do you select a market to invest in? What are the criteria you look at before invest?

[@fireknight673]

Also not fixing the property correctly becomes the big problem a lot of slum lords don't think of

[@ChandlerDavidSmith]

Fire Knight very true

[@jayc4715]

This is interesting....on 2 of my properties i have 70k invested and they cashflow 1400 a month.. I thought that was good (2%rule).. But after watching this..im considering using your method...and using credit/leverage instead

[@ChandlerDavidSmith]

jay c leverage can be a huge tool and give you the ability to buy more property and create more cash flow!

[@ChandlerDavidSmith]

jay c it’s awesome what you’ve done though! Congrats on killing it!

[@jayc4715]

@@ChandlerDavidSmith thanks..yea i need to try using credit/leverage..maybe on my next deal

[@ChandlerDavidSmith]

jay c do it man! You will love it!

[@avi6180]

Do you/should you count closing costs in your initial investment sum?