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How to Find High Cash Flow Properties in Hot, Appreciating Markets
Our new Cash Flow Finder tool is the only place on Planet Earth where a real estate investor can:
Instantly locate the best (and worst)
markets for high cash flow properties.
It gets even better…
Not only can you now list and rank, from BEST to WORST, every micro-market in the U.S. based on its likelihood to generate positive cash flow, you can ALSO instantly locate the rarest of all opportunities…
High cash flow properties
* in *
HOT, appreciating markets.
Historically, the best ‘appreciation’ markets have also been the LOWEST cash flow markets, for good reason:
Investors wanting to maximize their total profit will bid up prices in hot markets because Real Estate Wealth comes from Leveraged Property Appreciation, NOT from Operating Cash Flow.
Even a small decline in property value can offset YEARS of monthly cash flow gains. Continued declines wipe-out equity, leaving investors upside down and out of exit options.
Strong (appreciating) real estate markets are less risky and more profitable.
Properties are more expensive.
Cash flow is lower.
If you want to see more about what I mean, register for the FREE training event I put together.
I’ll show you exactly how to create wealth in Real Estate, instead of always hunting for the next shot-to-the arm deal that could leave you sitting on the wrong side of the closing table.
Now, let’s look at the hottest appreciation markets in the U.S. and see what kind of cash flow they produce.
In the screenshot above, we’ve ranked all the counties in order of their Hot Market Score. (The HMS is a scoring system that assesses the health of any local real estate market, especially in terms of its likelihood for high appreciation.)
The markets shown were the highest scoring counties when this screenshot was taken. The blue-bordered column on the left is each county’s specific percentile ranking when compared to all other counties. (A score of ’99’ means THAT county scored higher than 99% of all counties nationwide.)
The green background color also relates to its percentile score (see legend near the top). GREEN means ‘good’ – in this column, that means a high Hot Market Score.
Note how these strongest markets were the weakest for cash flow.
See how the cell color for these (green) HOT markets became RED over in the Gross Rent Ratio column?
That means they went from the TOP (99th percentile) – the best of the best – when it comes to APPRECIATION but dropped to the very WORST in the country (red color) for their Cash Flow potential.
The blue-bordered column to the right is the Gross Rent Ratio (‘GRR’) for each county. The number inside each cell is its actual GRR, calculated as follows:
Gross Rent Ratio =
Median Monthly Rent x 12 mos / Median Home Value
Gross Rent Ratio is a good proxy for likelihood of cash flow. Of course, each property and each market will have different expense levels, but in general, a good ‘quick test’ for evaluating a property’s cash flow ability.
Some investors use the ‘1% Rule’ which states: If the monthly gross rent is equal to or greater than 1% of the purchase price, you’ve got a decent chance for positive cash flow (again, depending on the expense levels for the specific property).
A GRR of 12% is the same as the 1% Rule, the difference being the GRR is calculated on the ANNUAL (not monthly) gross rent.
Of course, everyone would ‘like’ more cash flow, but knowledgeable investors often seek APPRECIATION markets because that’s where the money is made. They (should) care far less about cash flow (if they can afford it) because appreciation is what produces the ‘real’ profit and wealth.
But… high prices (in hot markets) make it near-impossible to find properties with decent cash flow. That’s why you often hear this age-old complaint from real estate investors of all types and experience…
“You can never find good cash-flowing
properties in hot real estate markets.”
Introducing the CASH FLOW FINDER…
We’ve re-ranked all counties nationwide based on BOTH their Hot Market Score * AND * their Gross Rent Ratio, COMBINED.
In a single click of the column title, you now have an ordered list (from best to worst) of the highest cash-flowing counties in the U.S. You can do the same for every Zip Code and every neighborhood!
By using our proprietary algorithms, you’re now able to filter through all the micro markets nationwide – every County, Zip Code or Neighborhood in the country – in a single click.
It instantly locates ‘needle-in-a-haystack’ types of markets that offer BOTH high appreciation AND high cash flow!
This tool is (currently) included at no additional cost with every PRO account.
You can even drill down INSIDE individual states and counties to locate the best (or worst) Zip Codes and Neighborhoods for Appreciation, Cash Flow and/or Median House Value… or for ALL indicators at once.
If you’re blown away by this new tool and want to grab a HousingAlerts account now, you can simply CLICK HERE to become a member.
Nationwide, we track and compare home prices against local market strength for more than 3,000 counties, 18,000 zip codes and 53,000 neighborhoods.
A single-city PRO account works out to less than $8/mo when you choose the Annual plan. You can also select MULTIPLE Cities, States or even go Nationwide to scan, score & rank EVERY County, Zip and Neighborhood!
To your success!
Harvard M.B.A., C.P.A.
Owner – HousingAlerts.com