BiggerPockets Real Estate Podcast

Episode: How to Make Any Rental Property Cash Flow (Before You Buy)
Host: Dave Meyer (BiggerPockets)
Guest: Ashley Care
Date: August 27, 2025

Overview

In this episode, Dave Meyer and guest Ashley Care break down the exact process of analyzing a rental property deal—specifically, how to adjust the numbers before making an offer to ensure positive cash flow. Through a real investment scenario involving a Buffalo triplex, they walk listeners through the nitty-gritty of deal analysis, negotiating price and terms, and making informed offers—even when the initial numbers don’t work. The discussion emphasizes realistic assumptions, creative financing, and negotiation tactics, all for the goal of building wealth and financial freedom through real estate.

Key Discussion Points and Insights

1. Why Initial Numbers Don’t Always Cash Flow—And That’s OK

• Dave reminds listeners that not all properties will cash flow at first glance, but “that is just a starting point. You have options to craft an offer that other potential buyers are not going to be thinking about.” (00:00)
• Focus is on which numbers you can legitimately adjust, and which you should never fudge.

2. The Deal: Buffalo Triplex Sourced Through Long-term Networking

• Ashley receives an off-market lead from a landlord she’d networked with years ago—demonstrating the long payoff of building relationships (02:09–02:49).
  • “He kept my card for three years ... Maybe I need to give out more business cards,” Ashley jokes.
  • “It’s just a long game. ... If you do this for two or three years, they’re just going to start hitting over time.” —Dave (02:49)
• Seller is seasoned, offloading multiple properties, open to seller financing and possibly a 1031 exchange.
• Property details:
  • Triplex, asking $275k (below local median)
  • Rented units: two 2-bedrooms ($900, $800), one 1-bedroom ($600)
  • Upside for raising rents and property improvements (05:56–06:46)

3. Walking Through the Analysis: Prepping Numbers

• Gathering All Info: Purchase price, current rents, renovation estimates, property taxes, insurance, management, vacancy, maintenance, etc.
• Ashley’s Approach: “Always do it as is … what the rents are. Because, what if the people stay there for three years? Then your rents are the same and you haven’t increased them.” (20:18)
• Big focus on modeling numbers conservatively and not assuming best-case scenarios.
• Discussed 3 potential financing routes:
  1. DSCR loan (Debt Service Coverage Ratio): 20% down, ~8% interest, 30-year fixed (17:01–18:18)
  2. Commercial loan from a small local bank: 20% down, ~8% interest, 20-year amortization
  3. Seller financing: Lower down payment, potentially attractive interest and term

4. Plugging in the Numbers—It Doesn’t Cash Flow!

• Using the BiggerPockets calculator, they input the real numbers:
  • $275,000 purchase price, $10k repairs, current rents, all estimated expenses
• Result: “Whoa. ... With the current estimates, you would lose $1,000 a month, and your cash on cash return would be a whopping negative 20%.” —Dave (26:33–26:54)

5. What Numbers Can You Change?

• DON’T fudge rent growth or underestimate expenses.
• DO adjust:
  • Purchase price
  • Your financing (down payment, interest rate, seller terms)
• Calculated the actual purchase price needed for break-even:
  • "You need to offer less than half of what they're asking for to break even." (28:24)
  • Only at ~$125k does the deal break even at today’s rents.

6. Creative Solutions: Seller Financing and Package Deals

• When “the bank numbers just don’t work,” Ashley explores seller financing:
  • 10% down, 3% interest, 30-year amortization at a purchase price of $225k
  • Still only break even at today’s rents, but upside as rents rise
• Packaging deals: "I'll buy both of them [triplex and duplex] for $350k and not even say how much is allocated to each one." (35:14)
  • Use portfolio purchases to negotiate further

7. Realistic Underwriting and Negotiation Tactics

• Model all expenses, including vacancy, capex, management—even if self-managing, to account for future changes (22:37–23:00).
  • “I do [self-manage], but I always account for it, 10%, because there was a time I didn’t.” —Ashley (22:55)
  • “8% [vacancy] is basically one month of vacancy per year, and to me, that’s just like a good way to be safe.” —Dave (32:28)
• Don’t be afraid to send two offers (bank terms & seller finance), or to show your math using the calculator report.
• If including variable expenses makes your offer lower than expected, explain your reasoning to the seller—educate if needed.

8. Setting Expectations: Creative, Patient, Data-Driven Investing

• Ashley: “I used to like 12 to 16% [cash on cash return], but that's getting harder.” (33:58)
• Dave: “If you can get even at 7, 8% cash on cash return on a deal like this, you're still doing better than you can get in other asset classes.” (34:03)
• Ashley emphasizes the importance of patience, negotiations, and building on existing management systems.

Notable Quotes & Memorable Moments

• (02:49) Dave: “It’s just a long game. … If you do this for two or three years, they're just going to start hitting over time.”
• (06:34) Ashley: “I rent a second story studio for $600 a month. So I think definitely a one bedroom could be increased to probably $750 to $850.”
• (13:00) Dave: “Do you run it at what they're asking for, which is 275? … Because maybe you have a slamming deal already and you don’t want to push too much to frustrate the seller. Or maybe it’s terrible and you really need to be aggressive. Well, we’ll find out.”
• (14:50) Dave: “Sometimes this is just the way it works. You just need to spend some money to increase rents, but market value is not really going to change that much. But it’s an investment in the long-term viability of your income.”
• (26:41) Dave: “What we're seeing is with the current estimates, you would lose $1,000 a month, and your cash on cash return would be a whopping negative 20%.”
• (28:24) Dave: “That means you need to offer less than half of what they're asking for to get this to break even.”
• (29:06) Ashley: “This is where I’m definitely looking at the seller financing option… Maybe I'm only putting 10% down, maybe it's only a 3% interest rate.”
• (33:58) Ashley: “Yeah, I used to like 12 to 16% [cash on cash return], but that's getting harder.”
• (34:18) Ashley: “I've spent a lot of time building my systems… to add another unit… is not very labor intensive or time-consuming on my portion.”
• (36:14) Ashley: “There's that duplex he wants to sell right away too. So in presenting this as a package deal… then he can decide when he closes.”

Key Timestamps

• 00:00–01:51: Episode set-up; why adjusting the numbers matters
• 02:09–04:24: How the deal came to Ashley (the power of long-term networking)
• 05:56–07:05: Rent estimates; pros and cons of buying with tenants in place
• 11:20–15:44: Step-by-step rental analysis and establishing conservative assumptions
• 16:04–18:39: Loans explained (DSCR, commercial, seller financing)
• 20:12–23:08: How Ashley models rent, expenses, and what to include
• 26:33–28:24: Breaking down the numbers—losing $1,000/month at asking price!
• 28:24–29:57: Adjusting price, exploring how low you’d need to go to cash flow
• 29:06–31:13: Seller finance analysis, still just break-even
• 33:58–34:03: Setting realistic investment expectations
• 35:14–36:31: Package offer strategy for multiple properties

Summary Takeaways

• Start with the real numbers, not what you wish they were. Input actual rents and expenses, being conservative.
• If it doesn’t cash flow, look for creative levers: Mainly purchase price and seller financing terms, not unrealistic income/expense assumptions.
• Package deals and rapport can uncover better terms. Sometimes the deal might not work standalone, but there’s opportunity when viewed as part of a larger purchase.
• Don’t be afraid to ask for what the deal needs. Use the math to justify your offer and explain to sellers why you can’t overpay—even if the answer is tough.
• Patience and persistence pay off. Build a network, maintain relationships, and don’t rush into bad deals.
• Always model all expenses, even if you self-manage. The goal is scalability and the option to free up your time.
• In the end, don’t force a deal—let the numbers guide you.

For deeper learning, listeners are encouraged to experiment with the BiggerPockets calculator, run numbers conservatively, and never be afraid to negotiate for what makes the deal work for them.