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Short Summary
Main recommendation: To find cash-flowing rentals despite high mortgage rates, cut your expenses by buying at a deeper discount, or use passive syndications, or use creative financing such as owner financing or "subject to" deals. Henry Washington frames these as the three ways cash flow is still available in 2023 when borrowing costs have nearly eliminated it for many investors.
Key Points
- Rising interest rates raise your financing cost, so if rents cannot rise to compensate, you must lower your purchase price to restore cash flow.
- Deep deals come from motivated sellers who need to sell and struggle to do so, such as distressed properties, divorce sales, or inherited properties the owner wants to unload quickly for cash.
- Syndications pool investor money to buy discounted, cash-flowing properties, and pay returns monthly or quarterly, offering passive cash flow.
- Creative financing lowers the monthly payment, either by offering sellers a choice between bank and owner financing or by taking over the seller's existing low-rate loan.
- The market now punishes mistakes more heavily, since rising values no longer cover errors the way they did two years ago.
Details Worth Noting
- Concrete instructions: Research the average days on market in your area, then have your agent pull a list of properties listed longer than that average. Evaluate them by working backward from the price that still produces the cash flow you need, not the seller's asking price.
- Concrete instructions: To find off-market motivated sellers, look for situations rather than houses, such as distressed properties, divorces needing a quick sale, or inherited properties far from the owner's home.
- Concrete instructions: When making an offer, present two options to the seller, for example a lower price with bank financing or a higher price with owner financing, so both can be cash-flow positive for you.
- Concrete instructions: For a "subject to" deal, take over payments on the seller's existing loan (the video cites rates of 2 to 4 percent), then confirm that the expected rent exceeds the payment you take over.
- Concrete instructions: To find owner-financing or subject-to sellers, ask your agent whether any clients wanted to sell but lacked enough equity for a traditional sale.
- Syndications exist for apartments, single-family homes, and commercial properties; choose one whose niche matches your interests.
- Henry Washington notes that buying off-market may feel uncomfortable, but deep discounts can also be found on the market with more effort.
Bottom Line
Cash flow in a high-rate market comes from buying at a deeper discount, passive syndication investing, or creative financing, and each requires research, education, and disciplined offers.
