How To Buy Property that Cash Flow.

I dive into how to calculate ROI on an income producing property.

Dec 29, 2024
How To Buy Property that Cash Flow.

How I Evaluate Cash-Flowing Properties—And What You Can Learn From This Lawndale Opportunity

Finding the right investment property isn’t about guesswork—it’s about understanding the numbers, knowing the market, and spotting potential. This two-unit property in North Lawndale is the perfect example of what I look for when evaluating cash-flowing opportunities.

The Numbers Don’t Lie: A Snapshot of Rental Potential

Current Market Rents
  • Each unit in this property can command $1,200–$1,500 per month, aligning with market averages for similar 2-bedroom units in Lawndale.
  • With two units, the duplex can easily generate $2,000/month in total rental income.
Expansion Opportunity
  • There’s room to add a third living space, increasing the property’s income potential significantly. With this addition, the total gross rent could reach $3,500/month or more, making it a high-yield investment.

Why North Lawndale is a Hotspot for Investors

Rising Property Values
  • The median sales price for multi-unit properties in North Lawndale just hit $383K, reflecting the area’s steady growth and increasing demand.
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  • Priced at $369K, this property offers a rare opportunity to secure a well-maintained, income-generating asset below the median.
Neighborhood Growth
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  • Lawndale is experiencing a wave of development, with new infrastructure, increasing buyer interest, and consistent appreciation trends.
  • A recent property across the street sold for $400K, showing how the area’s value continues to climb.
 

How I Break Down the Investment Potential

Rental Income vs. Expenses
  • Projected Income: With $2,000–$3,500/month in gross rent potential, the property can cover expenses while generating positive cash flow.
  • Expenses to Consider: Taxes, insurance, and minimal maintenance, with tenants covering their own utilities thanks to separate electric and gas meters.
Cash Flow and Cap Rate
  • Using a conservative estimate, this property has the potential to deliver a cap rate of 7–8%—an attractive return for investors in an appreciating neighborhood.

What Makes This Property a Smart Investment?

  1. Immediate Cash Flow: With one unit ready for occupancy and the other tenant-occupied until mid-January, this property is ready to generate income from day one.
  1. Turnkey Potential: No major renovations needed—this is a move-in-ready investment.
  1. Room for Growth: Adding a third living space could significantly boost income potential, giving investors flexibility to maximize returns.

What You Can Learn From This Opportunity

The 3 main questions to ask your self when evaluating an investment property
  • Does it cash flow immediately? Positive cash flow ensures your investment supports itself from the start.
  • What’s the potential for growth? Properties with expansion opportunities offer more ways to increase ROI.
  • Is the area appreciating? Rising property values signal long-term equity growth and stability.

Let’s Make 2025 Your Year of Smart Investments

Ready to explore opportunities like this one? Stay ahead of the curve: Take the next steps on this property, book a showing today.
💬 Or, schedule a consultation to dive deeper into your investment goals and see how this property—or others like it can work for you.