Max Cash Flow Now: Rental Property Income Affected by Neighborhood Associations
Max Cash Flow Now: Rental Property Income Affected by Neighborhood Associations
Rich bought a beautiful old fixer-upper in an neighborhood close to downtown, which was gradually evolving from a low income working class neighborhood to one that was now attracting young urban professionals. He didn’t know when he bought the property that there would be strong opposition by the area’s Neighborhood Association to using this home as a transitional house – renting individual furnished rooms to former offenders of soft crime. Rich called and asked us what we thought about turning this particular property into alternative housing.
If he went with alternative housing instead of a renting for normal market rates to a single renter, he would let 7 rooms, some private and some with two people sharing a room. He could make a net monthly profit of a little over $1,200. Nice cash flow!
While the money would be fabulous and very tempting, we told him to re-examine the strength of the Neighborhood Association.
Using our system we have never had a problem with a transitional house causing disruption in an area, but those not familiar with transitional housing aren’t always as open minded as we would like to give them credit. They hear the words alternative housing and renting to former offenders, and their imaginations run wild. Too much TV, and not enough of the facts, and Rich discovered they didn’t necessarily want the facts once their minds were locked into an opposing position.
With respect for the NA, Rich decided to use this particular property investment as a potential flip rather than as a transitional house. Why swim upstream? There are many neighborhoods that fit the requirements for good location, zoning and where the neighbors stay to themselves and appreciate others doing the same.
A primary consideration when deciding to buy or use an existing property as a T-house – stay away from HOAs, NAs, gated communities, townhomes and condos. A small and simple 3×2 in a quiet working-class neighborhood can bring you a $1,000 or more net monthly cash flow. The deals are still out there and the best are not in restricted areas.
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