Highest profit margin deal closed. Home built in 2006. Turnkey, CAP 20.
This home is a duplex, built in 2006, each side has 4 bedrooms and 3 baths with hardwood floors. Each side is currently rented for $650/mo.
Initial price: $64,900.
We offered $67,500 and lost to a $68,000 bid. The closing fell through and they were asking for highest and best. We offered $68,500 with 1% of the agent fee going to the closing costs (I found the property myself).
And...we WON.
With $15,600 gross rents minus about $800 in taxes and $800 in insurance. Assumed takeover price of about $70,000 with all fees and closing costs.
$14,000/$70,000 comes out to a 20% return. I know these are still fairly gross numbers, but I'm comparing apples to apples.
We have come close to these numbers before, albeit, in better areas. $55,000 home rented for $900/mo for example.
The neighborhood is a bit small, but it is located within an hour of a major city and 40 minutes from a major university. In my opinion, as long as rents are stable, I don't care if I don't see any appreciation. On the other hand, I think investors (like me) will push these property values up to at least a CAP 15 price, if not CAP 10.