Positive cash flow is still possible today's market. But you're not going to find much of it in the coastal markets. However you can find it here in Memphis. The cash flow here is real. Much of it will depend on how you structure your financing, how much money you put down if any, if you are working with the right team, the neighborhoods you buy in, and more.
How do we define positive cash flow? Positive cash flow is when the rents received exceed the monthly payment, maintenance, taxes, insurance, and all maintenance on the home. The amount of this cash flow will depend on the factors above. Every real estate investor has their own formula for determining this. We can influence the deal by ensuring that you buy the home for the right price, in the right area, and are working with the right team. Some real estate investors choose shorter terms to enjoy the benefits of positive cash flow in the future, while others finance their deals on interest only type loans for extra cash flow. It is our belief that if you invest in Memphis by careful evaluation of potential properties, positive cash flow can be obtained.
The key seems to be investing in quantity. For every 10 properties, you own in Memphis or anywhere, it seems that you will likely have 7 high performing investments, 2 that have some degree of extra maintenance and potential slow pay, and 1 unit that will have major maintenance or serious delinquency. Thus by investing in numbers it is likely to reduce your risk. For example it is possible if you just bought 1 property and it happened to be the 1 out of 10 that caused you severe problems, it might cause you to rethink real estate investing. We've seen the most success from real estate investors that had a specific plan in place to purchase multiple properties over a 1 year or longer investing period.