When buyers are looking to invest in a single family home to use as a rental investment that has a tenant in place, do they look to buy at 70% LTV or are they going to look more at the cash flow even if the price is at 85% LTV but has say a 12-15% CAP rate and no repairs or upgrades are needed
There is no such thing as a Cap rate on a SFH.
@Ed Kahle I can't speak for others. But for myself, I'm running the numbers to make sure I can hit the cash flow I want on a monthly basis. I focus on buy and hold. Others who are doing flips or rehabs often use the 70% principle as one metric to analyze a property. That would mean they want to pay (ARV (after repair value) x .70 )- repair costs. They use that 70% to make sure there is profit for them when they sell it or so that a bank will refinance it and they can take their cash back out.
Many buyers who plan on investing in single family homes look at the rent versus purchase. I know "I" personally always plan on finding my own tenants!
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