First time real estate investor - help with expectation

9 Replies

I am looking for a multi family property in San Antonio TX now for a couple months , I am using bigger pockets.com calculator to calculate CoCROI and cash flow, I am aiming 10% CoCROI the first year, is this too high a ROI to find ? What ROI and cash flow is everyone looking for ?

Thank you in advance 

You probably aren't finding 10% COC in any major texas metro... Those days are long gone in any city that many investors are looking to buy in. You should be able to hit 4-6% in SA if you find a good deal.

@Yashar Fred most traditional rental investors that I know here in San Antonio are getting just over neutral cash flow in year one, when choosing areas where they expect strong rent growth and appreciation. Many of my clients have shifted to short term rentals, if they're looking for strong cash flow immediately.

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Are you actually looking at any properties? Because if not, you are setting yourself up for analysis paralysis. Using the calculators and spreadsheets are not a good use of time before you see in person what those numbers look like. They often miss market-specific info that can make something that looks good, be bad, and vice versa.

Yes I am actually seeing properties and putting offers, however , have found it extremely rare to come across with a 10% ROI in my calculations . I was wondering if I am making mistakes in my calculations or I should adjust my expectations.

If you stay at it over the years, you will have a couple of really good deals but that isn’t the norm for me. B-/C houses in B-/C neighborhoods needing repair I was able to cash flow well but my nice houses usually just broke even or very small cash flow the first few years. My nice houses have had fewer repairs, keep tenants longer, fewer rent payment issues and more appreciation.

Originally posted by @Yashar Fred :

Yes I am actually seeing properties and putting offers, however , have found it extremely rare to come across with a 10% ROI in my calculations . I was wondering if I am making mistakes in my calculations or I should adjust my expectations.

Assuming you mean 10% cash on cash as 10% ROI is easy to achieve.

You need to adjust your expectations, you're about 3 years too late on 10% cash on cash. 

Depends on your market. In TX, looks like 10% CoC is no longer super common. There are other markets out there that will meet that criteria if your goal is cash flow. I'm partial to Metro Detroit where we'll see that both in the actual city and in many of the ring suburbs; however, while it isn't as commonplace as it used to be, there are still markets out there in a bunch of places across the country where it works.

Depends on quality and location. A run-down property in a bad part of town will pencil in a higher cash on cash on paper. It doesn't factor in all the work you need to do to manage the place. It'll be a lot more in this type of property.