Cash Flowing Rentals

Why Are Market Conditions Favorable to Investing in Cash Flowing Rental Properties?

As the housing market has gone through its correction period, demand for single family rental property is at historically high levels. This is driven in large part by the tenants that were previous owners/occupants of single family homes that were lost due to foreclosure or other unfortunate circumstances.

However, the desire of these individuals to continue to reside in single family homes has remained and thus driven the demand for single family homes in the rental market.

Buying cash flowing rentals is for the partner who is comfortable with and understands the risks and rewards of being a landlord. Many areas of the country are producing opportunities for this type of asset. Being willing to hold rental properties for a long-term period and take advantage of the convenient and favorable seller financing terms has the possibility of creating an immediate cash flowing asset.

What Are Cash Flowing Rental Properties?

  • Existing tenant/lease already in place
  • Provides a positive monthly cash flow
  • Recently rehabbed to rental standard for the local market conditions
  • Professionally managed
  • Property taxes paid current
  • Clear title

Why Purchase Cash flowing Rental Properties?

  • Attractive seller financing* terms available for approved landlords
  • Existing tenant in place
  • No long lag between purchase and generating cash flow
  • No immediate rehabbing necessary
  • No worries about hidden title or delinquent property tax issues

Cash Flowing Rental Property Example

$1130/mo. rent

$199/mo. taxes

$56/mo. Insurance

$113/mo. Management

$762/mo. NET

Sales price of $65314 provides 14% annual cap rate.

 

Cash Flowing Rental Property Example With Seller Financing

Investment

Purchase Price $58,500
Down Payment $29,250
Interest Rate (fixed, not APR) 9%
Loan Term 120 months
Monthly Payment (includes loan servicing fee) $389.02

Pro-Forma Projections

Net monthly income after P&I* $91.97
Months Until Property is Free and Clear 120

Rental Costs / Income

Gross Monthly Rent $800
Monthly Property Taxes $137
Monthly Property Insurance $97
Monthly HOA $0
Monthly Property Management $85
Net Rental Income (before P&I*) $481

*Performance of tenant and anticipated expenses is not guaranteed. Other expenses like maintenance and vacancy are not included. There are other expenses with owning rental properties that are not projected here. Buyer should conduct their own due diligence to verify all information. This contains a high degree of risk and is not for every person/organization. Featured assets may not actually be owned by Cleveland Asset Management. Refer to the purchase agreement for name of seller. Property management services are provided by an unaffiliated third party vendor. This is neither an offer to lend nor solicitation for seller financed candidates. Seller financing underwriting criteria apply and not all landlords/borrowers will qualify. Monthly payment illustrated above includes monthly loan servicing fee paid to third party loan servicer. Normal underwriting criteria and closing costs apply and are additional costs to the purchase price.