Real Estate Agent · NJ · Member since 2019 · 237 posts · 169 votes
6y
Really comes down to cash flow and potential appreciation. I use the 1% rule as a generic baseline not a make or break, but it gives me an idea. I won't invest in flood plains or areas with septic tanks or well water. The liability and extra charges aren't worth it.
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
6y
We prefer properties built since 1980 but do buy older properties. Each deal is analyzed on its own. Cash flow is the primary factor as we live off our rental income. We usually buy all cash and typically fixer sfr's.
@John Teachout Have you found that the older properties you purchase have cost you more in repairs and in headaches haha?
It varies. The primary reason for 1980 and later is they don't have issues with lead paint and asbestos as both of those were not being used by then. And the wiring is typically grounded by then too. Of course, then there's polubutylene plumbing and so forth.
Could I elaborate on cash flow minus tenant problems? No. Take a minute and think about it. This business requires common sense was my point. Stop and think and stop asking silly questions. And yes that was mean, but necessary.
Real Estate Agent · Oklahoma City, OK · Member since 2019 · 956 posts · 600 votes
6y
@Victoria Coleman 8% caps in C class areas, 7% caps in B class areas (unless it's a more up a and coming pocket) and 6% caps for A-class/new construction/complete flips.
If something has all new major mechanicals or a strong cosmetic upgrade I'll drop lower than that!
Real Estate Agent · NJ · Member since 2019 · 237 posts · 169 votes
6y
@Victoria Coleman Not always. Depends on the area. In Northern NJ where I primarily invest it’s extremely difficult to find a property that cash flows at the 1% rule so if you do find one you know its rare and worth looking into. Otherwise, I’ll usually compare all the numbers when making a final decision
Real Estate Coach · Salt Lake City, UT · Member since 2017 · 272 posts · 414 votes
6y
@Victoria Coleman
We only buy multifamily, 80 units or greater.
We raise private capital from regular people that want to invest passively in real estate, so our criteria is we need to be able to achieve 15% in average annual returns for the investors at a 75/25 investor/operator split. That makes it easy to market to investors and worth our time too. We typically look for properties that need a little TLC, but have solid occupancy numbers (though we did buy one at 67% occupancy and are turning it around).
Realtor · Saint Charles, IL · Member since 2020 · 126 posts · 101 votes
6y
@Victoria Coleman
I have one at 1% and if not for the potential for using the equity for a heloc I would be selling it. After vacancy and repairs set aside my cash flow is 30.00 before that stuff is 340$ but I’ve had same tenants for 3.5 years and no major repairs. So it’s a lot about the tenants at the 1% market in my opinion.
Charlotte, NC · Member since 2018 · 124 posts · 83 votes
6y
@Sue K. For starters, no question is silly. I’m sure there are plenty of questions that you’ve asked that could have been considered “silly,” but the bottom line is that you DID NOT know the answer. Secondly, everyone else has been very helpful in answering a newbies questions because that’s how you learn, and that’s why we’re here on BiggerPockets, to learn and help others and network. If you’re not interested in helping people, then please don’t bother commenting. You didn’t bring any value to this post! Have a wonderful day Sue!
Charlotte, NC · Member since 2018 · 124 posts · 83 votes
6y
@Sue K. Also, this was not necessary and you could’ve taken the time to elaborate on the question as opposed to making yourself look bad. Take a minute and think about it.
Realtor · Saint Charles, IL · Member since 2020 · 126 posts · 101 votes
6y
@Victoria Coleman
That rental was out of necessities a few years back. I didn’t start exploring rei as a vehicle to greater financial freedom and wealth until recently. I am looking to get into the Milwaukee market as soon as I can safely I find I can get closer to a 2% deal up there. Illinois taxes can easily crush a good real. An ultimately I don’t want a long term rental in a state with a track record of continuous decline that’s just my personal opinion.
@Victoria Coleman It really depends on your goals, risk and location. I do long term rentals, so I look for places in areas that I would want to live and homes I would live in. I usually have starter type homes (so nothing high end or fancy). I've bought places that need some work (more than paint, but not a gut job) and some that need no work.
I buy based on cash flow, but I don't use the 1% rule. It's only a guide. Cash flow for SFH $300 plus. I typically use the BRRRR method so I am forcing appreciation. Multifamily units $150 per door at a minimum for buildings greater than 6 units. Two units $300 per door. 3, 4 and 5 units $200-$250. There are many variables as each property has its own uniqueness.