Posted by Richard on February 01, 2000 at 23:49:47:
I have to make my living off my rental income
so I tend not to look at it in terms of percentage
rates. I want to net (after ALL expences)
at least $300. per unit. I have SFR, and duplexes.
I will not spend time looking at a property
unless the real (not someones hair-brained guess)
gross rents are .75% of the purchase price or less.
Its my rough ballpark way to value income property.
I rent mostly to students out here in CA.
Richard
What kinds of returns are you getting on your SFR Rentals ? - Posted by DougO(NM)
Posted by DougO(NM) on February 01, 2000 at 18:52:27:
I realize that every deal is different, but all things being equal, (?) what kinds of returns are “normal” for SFR rentals ? I found a deal today on a VA Repo, and I have a private investor that will fund most of the deal. (I will only have to put in $5-7K) It will be a keeper for me, as it’s a MH on it’s on lot, we are in avery very tight area for these properties, and besides, thats my business! I know I can rent it, I might be able to sell the home and rent the land as well, but I’m pretty sure it’s been declared “real property”, so it’s not two seperate items. Anyway, based on what I know I can rent it for, debt service, taxes, insurance, etc. it looks like it will give me a cash on cash return of around 14% and a return of 12% if it were free and clear. This looks ok to me, especially as someone else gets to pay it off for me. Comments ? Am I missing anything ? Thanks for your input.
Doug
Re: What kinds of returns are you getting on your SFR Rentals ? - Posted by Jim Rayner
Posted by Jim Rayner on February 01, 2000 at 21:39:20:
Doug,
wish i had more SFR’s but i only have one that i just picked up a month ago. i only bought it to get control of the land for expansion of one of my multiunit complexes. Had it a week and some one rented it giving me a 40% gross cash on cash return a nice bonus since i had raised my rents in the multiunit property effective today to cover the acquisition since the extra lot are will soon become additional parking for them. it was a great rent collection day today! I 'm not sure i would expect that this rate of return would be typical but it does fit my investing criteria of 30% minimum cash on cash.
Re: What kinds of returns are you getting on your SFR Rentals ? - Posted by Bukzin
Posted by Bukzin on February 01, 2000 at 20:48:45:
I would do a couple of things before investing.
Check with both the local property owners
(landlords) assn. and 2 or 3 property management
companies and double check your rental incomes
and ask about expected vacany rates given your
exact neighborhood and the fact that its a mobile.
Proceed with care.
After being a hands on landlord/handyman for
the last 15 years I think the most important
lesson I have learned is ‘pay more for location’.
Less cheeseballs, less vacancy, less damage
all equal more profit and fewer ulcers!!!