Rental Investment

[Trey Bolen]

George,

What are some benchmarks that a cash buyer looking to acquire rental properties uses when analyzing a property (i.e. net income, ROI, etc.)?

Thanks,

Trey

[George Roddy]

Trey,

Most cash investors usually get some type of debt service to leverage their cash. Right now, most local banks would give 60% ltv (loan to value).

Most investors are looking for ROI of 22%-28% annually. Minimum cash flow of $300-400mo a 75k to 150k price point.


Case Study:

ARV: 130k
Acquisition: 80k
Rehab: $15k

Total vested: $95k

Investor get loan from local bank for $80k, (includes 2k for closing cost).

PITI: $850
Rents: $1300
Reserves/Mgt: $150mo.
Cash Flow: $300 mo. / $3600 annually.
Return: 24% ($15,000 / $3,600)



I hope this helps?


George