Max Cash Flow Now

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.

Discover how you can maximize your rental cash flow by downloading our free Ebook on the right side bar.

Max Cash Flow Now: Finding an agent’s “pocket deals” for your investment portfolio will increase rental property income.  A pocket deal is slang for real estate a Realtor may know is about to be listed or a present listings price is about to change.

It was a year ago a Realtor called to say she had a listing that a bank had foreclosed upon, but was having difficulty getting any offers and was lowing the price $20,000, (about 20%) and that it would take effect the following day.  We made arrangements to see the property and put in an offer that same day.  As no other buyers were able to submit an offer within the 24 hour deadline of our offer, ours was accepted.  We got a great deal.

Once you have found your great deal, what are you going to do with it?  Rehab and flip, or rehab and hold?  If you’re considering holding and building a real estate portfolio of rental properties don’t settle for a small monthly income while you are waiting for real estate prices to rebound.  Instead, why not go for $1,000 month in net rental income per property?

We learned of our REO agent because we called on another listing which had the term REO in it’s listing remarks.  REO stands for real estate owned, and is the nomenclature for a listing that was probably foreclosed upon by a mortgage lender.  We went on to clear a monthly rental profit of $1,300 on the above mentioned property and then turn-keyed it to another like-minded investor four months later for a $35,000 return.  The new investor kept our program in place and now he is clearing the $1,300 monthly.

You may already know and maybe not but some real estate brokerages cultivate relationships with a bank’s asset manager, who will list many of the properties that it has in it’s inventory.  Therefore, it’s important to build a relationship with these specialized brokers.  We recommend that you avoid signing an exclusive representation agreement with any particular agent, as you’ll build relationships with many of them.

Learn how we make our monthly profits on rentals and how we have helped others do the same by downloading our free eBook, see sidebar.