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Rui is the guest today. He is a real estate investor living in Southern California with two single family homes under contract in Houston, each with over $300 cashflow per month.
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Big Head Todd
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Great Podcast.
I don’t know much about the real state in Houston, but it seems to me like a risky business. $300 cashflow/month is borderline dangerous to any sudden income fluctuations.
Thanks for the making this content available for free. Good to have this perspective.
Leo Saraceni
Leo,
You bring up an interesting point that touches on a whole host of different concepts. But for now, I will focus on the $300/month cashflow.
20% down payment: $9k
Rehab cost: $15k
Closing costs: $3K
Total out of pocket investment: $27K
Now, a $300/month translates to $3.6K annual which means your are making a 13% return on your investment annually.
Remember also, that cash flow is only one of the many ways you make money on these kinds of investments. There are other significant wealth creation benefits such as equity capture, equity buildup, tax advantages, etc.
Take care,
Rui
In Houston, he’s probably getting about $900 a month in rent, which means it would have to fluctuate all the way down to $600 in order for him to loose his cashflow. That’s not going to happen.
Your observation was really very interesting and very informative. Thanks for the information. I learned a lot.
I enjoyed reading it.