How to Find Cash Flow Positive Properties in Minutes - YouTube

Hey guys, it's Ken McElroy here and  as you guys know, I grew my career  

on finding properties that cash flow so that  I personally could become financially free.  

And of course I’ve taught people how to do that  over the years. The question is is can we still  

find cash flowing properties? I decided to do a  short video on how to find cash flowing properties  

in minutes and I did this in minutes guys.  And I did it all on the internet from my desk  

and so we're going to get right into it. So  obviously you guys have all heard of Zillow.  

It's really evolving into all kinds of stuff and  so are a lot of other platforms, so these are  

available to you and you guys can do all of this  from home. And so I started to find properties  

that were low priced that had big rents and so  the number one thing that I want you to know  

is that what you're trying to look for is a  large gap between the rent and the mortgage.  

And how do you know where the mortgage is? And  so that's the big question because a lot of  

people they don't know. And so here's the cool  part- this is actually the best part- so Zillow  

actually shows you right here the estimated  payment for this house at $110,000 is $499  

a month. The estimated mortgage payment. So you  already know this, you already know that with 20%  

down, your estimated payment based on today's  rates is 499 a month. There are some steps  

you have to do later to verify this information,  but this is a great example of a property it's a  

three-bedroom, two bath, 1320 square foot home. So  this property isn't particularly beautiful okay?  

So as you guys can see it needs landscaping, it  needs some basic TLC that's for sure, but it is  

for sale for $110,000. So now let's take a look  at what Zillow thinks the estimated rent would be  

on this particular property based on the rental  value, this property rents for about 1200. Now,  

you have to verify this yourself okay? But  this information is on the internet. I found it  

in one minute. I found this property and it was  all on there. $110,000 for the house, 100- $499  

for the mortgage payment, and $1200 for the  rent. Now let's take a look at the house itself.  

There's a couple things I liked about this house.  It has new wood floors, new wood burning stove,  

upgraded gas cooktop and oven, new flow toilets,  vanities in the bathrooms, new light fixtures,  

upgraded cabinets, it still needs flooring in  the bathrooms, the kitchens. That's good to know,  

but also in 2018 they put on a new roof. One of  the things that can kill you in real estate is all  

that capital work after you buy something. Look at  this property. It's not bad. The kitchen's nice,  

you know, the living room's nice, it's  decent, it's a rental. Don't get don't get  

too concerned about the way it looks from the  outside because you can clean that up with just  

some basic landscaping. But here's the point what  we're trying to do is look for a large gap between  

the rent and the mortgage, okay? We know the  mortgage is 499 and we know the rent is 1200.  

Obviously you have to verify both of those, but  this is a very good start. The difference between  

499 and 1200 is 700, so you have a $700 window  to work with that is potential cash flow. Now  

it's not going to all be cash flow because there  are expenses. We're going to go into that net. So  

here's another thing on Zillow. They gave me this  this monthly cost principal and interest is 380,  

property taxes $81, home insurance $39 a month.  Now again you got to verify it. No hoa - that's  

good, utilities are paid by the tenant, okay?  So so they give you a breakdown and that 499  

to my surprise is actually includes property taxes  and homeowners homeowners insurance etc, so that's  

even better. So now you gotta now you got to take  a look at, okay, what are the other things that it  

might not consider? All right so we know that the  rent's 1200, but you got to add some vacancy in  

there. And this of course is going to be market to  market and based on the demand for the property.  

And this might kill it. So in other words there  might be 50 vacant in that market. You would want  

to stay away. But there might be 100 occupancy  too. This is something that you need to check but  

for purposes of this video I did one month over  12 months of vacancy, 12 months at 100 is 1200,  

so 100 a month. So I added a vacancy in there of  $100 a month. I took the principal and interest  

of taxes insurance, just 499 or 500 a month, I  added a hundred dollars a month for repairs and  

I said you know what? I can manage this one  myself. It's just one property. If you don't,  

you need to add that in. So with repairs and  vacancy I cash flow about $500 a month or $6,000  

a year. Okay? This is on the internet right now.  I’m not going to obviously buy this property  

I’m just trying to show you how to do this now.  There might be other expenses, there might be  

other capital work, that's why I showed you that  there was new roof, new flooring, new appliances,  

etc because those are things that can kill you  here because those are real costs. But somebody's  

already done that. There is some carpet and stuff  that needs to be done and maybe that's a thousand  

or two thousand but regardless, you're gonna cash  flow let's let's say somewhere about $500 a month,  

$400 a month, $300 a month, still good. These are  positive cash flowing properties. I found this  

guys in less than five minutes on the internet.  All I was trying to do is find a big gap between  

the rent and a big gap between the expenses and  find a big cash flow. That's all I was trying to  

do. And so if I can do this you could do this  too. And I just did it for the video for you.  

This property cash flows six thousand dollars  a year so now you're at the next step,  

you know, that this might be a good deal. It might  not be a good deal, you got to check is that a  

true rent number? Is there more- are there more  operating expenses? Is this cash flow correct? All  

those things you got to check, but this is super  encouraging. You got almost $500 a month cash flow  

on this property that's $110,000. So now we go to  the next step. Now you know this is the potential-  

this is a potential property that will cash flow.  So the key is here is that you want to find 8 or  

10 or 20 of these deals so that you- if you find  10 of these deals you're going to find $60,000 a  

year of cash flow. That's what we're trying to do  here. We're trying to create financial freedom for  

you. Now let's go into the next scenario because  a lot of you are saying, “I don't have the money,  

I don't have the money for the down payment,  how am I going to buy $110,000 house I’m out of  

a job?” I’ll show you how. So the first thing  you want to do is you want to make an offer.  

Now here's the cool part- also on Zillow is you've  got a history of this property. The estimate for  

the property is 108 here and this is where the  property's been bumping around in 2012, 14, 2016,  

2018 it's gone up. Now it's gone down from 2020,  but the point is at some point guys not very long  

ago it was around 70 grand. That's the point of  real estate investing. Now, the rents were lower  

here too but the rents have gone up and the prices  have gone up so don't get too concerned about this  

chart, just know again you make your money when  you buy. In this particular case, I like this  

deal because it cash flows $500 a month - at least  that's what I think it will right now. And so you  

may want to offer less you may not want to offer  less. Honestly for me, I would probably just offer  

the full price because if it does cash flow $500  a month I don't really care about that extra $1400  

difference in the in the value. So we know  we know that this property is $110,000  

and so the question is how do we buy it if we  don't have any money at all? The first thing we  

do is we make an offer for 110k and then we find  the money. You can do those simultaneously. In  

other words, if you go to an investor and say,  “I think I found a property that cashflows $500  

a month,” you're going to raise their interest.  They're going to say, “Show it to me.” And you're  

going to walk through the numbers just like I  did, and then you're going to make that offer with  

a lot more confidence because you maybe have a  financial backer. That's how we do it today. Now,  

once you get rolling you can put these things in  escrow and then go back to your group of investors  

that you might have. You can use other people's  money (or OPM) or you can use yourself, it doesn't  

really matter. Point is, you need to find the  money next in order to buy this for $110,000  

and there's only two things that you need: One  is the debt and the other is the equity. So the  

down payment we know twenty percent of a hundred  and ten thousand is twenty two thousand dollars,  

and you know that you're gonna need  a loan of about eighty percent,  

the difference between the twenty percent  for about eighty eight thousand dollars.  

Now again Zillow’s already done this work for  you. If you go look at the Zillow estimate and  

you can get pre-qualified, you're going to get  your payments pretty darn close to that $500  

a month for the principal and interest, the  taxes and the insurance. All that's kind of  

wrapped up in here. I’ll let you guys go do that  on your own, but you get the point. Maybe your  

rate's two and a half percent, maybe it's three  and a half percent, maybe it's four percent,  

that's all going to cut into your cash flow.  That's all it is, but the point is you just  

got to go find the money for the down payment and  you got to find the loan and honestly the loan is  

pretty easy because now you have a property you  take to a mortgage broker or a bank and you say,  

“I want to- I want to buy this property,” and then  they start to work because these people are in the  

business of putting loans on real estate. That's  what they do for a living. And so then you have  

to negotiate the rate and the terms and all those  kinds of things. The only thing you really got to  

do is find this down payment and the truth is guys  you can get 22 people at a thousand dollars each,  

you can get one person at $22,000, you can  take money out of your retirement account,  

you can take a small piece of refinance out  of something that you own, so the next piece  

is to say, okay what kind of return is that going  to be? This is what investors look for and this is  

what you should be looking for. What is the return  on my money? If you convince somebody to give you  

that 22 thousand dollars and they invest in that  property, they want to know is my money secure and  

what's my return? Because they're taking it out  of a stock market, they're taking out of the bank,  

they're taking it out of something and they're  giving it to you for some reason. That's if you're  

raising money, but even if you aren't raising  money you should be super clear on what the return  

on that money is. So in this particular case if  we have six thousand dollars of cash flow and a  

twenty two thousand dollar down payment, that is a  27% return on your money. That's cash on cash. Now  

this is how you raise money. This is why you don't  need money to make money because all I’ve done  

in five minutes is find a property on Zillow for  $110,000, get all the information off of Zillow.  

I still need to verify the expenses, I still need  to verify the rent, I still need to make sure it  

doesn't need a lot of capital repairs because that  can all eat away your cash flow. In five minutes,  

I found something that was six thousand dollars a  year on a twenty-two thousand dollar down payment  

that produces a twenty seven percent cash on  cash return. Who doesn't want that? There's  

no way you guys are getting that sitting in a bank  account, there's no way you guys are getting that  

in the stock market, there's no way a lot of  people are getting these kinds of returns, so when  

you're looking for your $22,000 down payment what  you do is you show them that there’s six thousand  

dollars in cash flow. Who's not going to invest  in that when they know that they can make 27%?  

That's how this is done. You guys don't need  any money and so what you do is you cut a deal  

with the investor. You say, “Listen I’ll give  you 20%, I’ll give you 10%, I’ll give you 15,  

let's do a 50/50 deal, whatever it is you  cut a deal but you know you have $6,000  

to play with and all you need is 22. So if you  don't have the 22 you got to pay your investor  

and they got to pay you for all this work  and that's how you cut your partnership deal  

right here. But you do it with the real estate  itself, you do it with the cash flow itself,  

you don't need the money you just  need a great deal with a great return.  

And that's how you find cash flow properties  on the internet in minutes. You still need  

to verify all the information of course but this  is how you raise money on a property-by-property  

basis and investors love this stuff and this  is what they're looking for. If I can do this,  

you guys can do this. So good luck. So if you  guys like this video and you like what you saw,  

just hit a thumbs up so lots of people  can see this information as well. Thanks.