Are there CoC 8%+ markets (without needing rehab)?

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Are there CoC 8%+ markets (without needing rehab)?

Angel Wu
New to Real Estate · Los Angeles · Member since 2022 · 10 posts · 13 votes

Anyone know of any markets with CoC of at least 8% without having to rehab? Is that even possible with today's interest rates? I'm new to this so need your input. I identified a hot market (Columbus OH) and analyzed many SFH/duplexes on and off market and found that the CoCs I'm getting are negative (A/B) to at best 2-3% (B-/C). One thing that is difficult to account for in my analysis is the actual property tax. My realtor has told me that the property taxes are based on assessed prices and that the county reassesses every 6 years, but that the worst case scenario would be 2% of purchase price if they reassess upon sale so 2% is what I've used in my calculations. The rest of the expense, I went with standard numbers/what my realtor suggested for the area. I can't imagine investors are investing for this type of CoC so does this mean they are only buying for appreciation? I get rehabbing to unlock value is crucial in REI success, but as a first timer and out of state I'm just not up for that yet. With all of that being said, if I'm not up for buying for appreciation and not up for rehabbing, then I should probably hold off on buying now, right?

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Scott E.
Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes
4y

I don't know your sub market but I'll say this - Achieving a true 8% cash-on-cash return on a turn-key single family home in ANY market right now is going to be challenge. Some deals might be marketed as 8%+ but then you realize that it's a 100 year old house and they didn't account for repairs, maintenance, or Capex. Which will fizzle that return down quick when a big expense inevitably comes up.

The only turn-key place I've seen 8%+ cash-on-cash returns in my market lately has been in commercial, specifically medical condo units with a sale leaseback structure. They offer higher cashflow returns in exchange for you paying a premium for the deal.

There is money to be made in this market. There is money to be made in any market. It is just more challenging during times like this where property values are high and rates are climbing as well.

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  • Larry Turowski
    Flipper/Rehabber · Rochester, NY · Member since 2014 · 1k+ posts · 1k+ votes
    4y

    @Angel Wu 8% CoC isn't even particularly good. You don't share an actual deal example so it is hard to say. Maybe you are looking in A class neighborhoods?

    1Reply
  • Scott E.
    Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes
    4y

    I don't know your sub market but I'll say this - Achieving a true 8% cash-on-cash return on a turn-key single family home in ANY market right now is going to be challenge. Some deals might be marketed as 8%+ but then you realize that it's a 100 year old house and they didn't account for repairs, maintenance, or Capex. Which will fizzle that return down quick when a big expense inevitably comes up.

    The only turn-key place I've seen 8%+ cash-on-cash returns in my market lately has been in commercial, specifically medical condo units with a sale leaseback structure. They offer higher cashflow returns in exchange for you paying a premium for the deal.

    There is money to be made in this market. There is money to be made in any market. It is just more challenging during times like this where property values are high and rates are climbing as well.

    6Reply
  • Nathan Grabau
    Realtor · Longmont, CO · Member since 2021 · 577 posts · 631 votes
    4y

    I am experiencing 10%+ CoC in the Ames, Iowa market. My realtor there is also an investor/ property manager so it has made life very easy as a long distance investor. Send me a message and I can get you connected with him.

    I particularly like the area because it does not have the declining economic opportunity/ population that many of the other good cash flow markets have, such as Detroit or Cincinnati. 

    5Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    4y
    Quote from @Angel Wu:

    Anyone know of any markets with CoC of at least 8% without having to rehab? Is that even possible with today's interest rates? I'm new to this so need your input. I identified a hot market (Columbus OH) and analyzed many SFH/duplexes on and off market and found that the CoCs I'm getting are negative (A/B) to at best 2-3% (B-/C). One thing that is difficult to account for in my analysis is the actual property tax. My realtor has told me that the property taxes are based on assessed prices and that the county reassesses every 6 years, but that the worst case scenario would be 2% of purchase price if they reassess upon sale so 2% is what I've used in my calculations. The rest of the expense, I went with standard numbers/what my realtor suggested for the area. I can't imagine investors are investing for this type of CoC so does this mean they are only buying for appreciation? I get rehabbing to unlock value is crucial in REI success, but as a first timer and out of state I'm just not up for that yet. With all of that being said, if I'm not up for buying for appreciation and not up for rehabbing, then I should probably hold off on buying now, right?


    U may want to look at Vegas newer stock high rents super low property tax's.. if you pay cash for the property you should be able to get close to 8% COC ..

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  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    4y
    Quote from @Angel Wu:

    Anyone know of any markets with CoC of at least 8% without having to rehab? Is that even possible with today's interest rates? I'm new to this so need your input. I identified a hot market (Columbus OH) and analyzed many SFH/duplexes on and off market and found that the CoCs I'm getting are negative (A/B) to at best 2-3% (B-/C). One thing that is difficult to account for in my analysis is the actual property tax. My realtor has told me that the property taxes are based on assessed prices and that the county reassesses every 6 years, but that the worst case scenario would be 2% of purchase price if they reassess upon sale so 2% is what I've used in my calculations. The rest of the expense, I went with standard numbers/what my realtor suggested for the area. I can't imagine investors are investing for this type of CoC so does this mean they are only buying for appreciation? I get rehabbing to unlock value is crucial in REI success, but as a first timer and out of state I'm just not up for that yet. With all of that being said, if I'm not up for buying for appreciation and not up for rehabbing, then I should probably hold off on buying now, right?

    I believe property taxes in Columbus, Ohio get reassessed every 3 years but I would speak to a local CPA.

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  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    4y

    Theres lots of areas that look like that on paper but what is actually cashflows can be an entirely differant number. Take for example all the cheap Ohio, Indiana, etc. markets. The pro-forma never accounts for the tenants that get evicted, etc. In class A/B markets I think 5-10% cashflow at 25% down is still possible with 6% being very easy to find. 

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    4y
    Quote from @Remington Lyman:
    Quote from @Angel Wu:

    Anyone know of any markets with CoC of at least 8% without having to rehab? Is that even possible with today's interest rates? I'm new to this so need your input. I identified a hot market (Columbus OH) and analyzed many SFH/duplexes on and off market and found that the CoCs I'm getting are negative (A/B) to at best 2-3% (B-/C). One thing that is difficult to account for in my analysis is the actual property tax. My realtor has told me that the property taxes are based on assessed prices and that the county reassesses every 6 years, but that the worst case scenario would be 2% of purchase price if they reassess upon sale so 2% is what I've used in my calculations. The rest of the expense, I went with standard numbers/what my realtor suggested for the area. I can't imagine investors are investing for this type of CoC so does this mean they are only buying for appreciation? I get rehabbing to unlock value is crucial in REI success, but as a first timer and out of state I'm just not up for that yet. With all of that being said, if I'm not up for buying for appreciation and not up for rehabbing, then I should probably hold off on buying now, right?

    I believe property taxes in Columbus, Ohio get reassessed every 3 years but I would speak to a local CPA.


     would you not get this info from the city or county tax collector or their website why would you talk to a CPA ?  Just curious is all my CPA would have no clue on property tax reassessments. 

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  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    4y
    Quote from @Jay Hinrichs:
    Quote from @Remington Lyman:
    Quote from @Angel Wu:

    Anyone know of any markets with CoC of at least 8% without having to rehab? Is that even possible with today's interest rates? I'm new to this so need your input. I identified a hot market (Columbus OH) and analyzed many SFH/duplexes on and off market and found that the CoCs I'm getting are negative (A/B) to at best 2-3% (B-/C). One thing that is difficult to account for in my analysis is the actual property tax. My realtor has told me that the property taxes are based on assessed prices and that the county reassesses every 6 years, but that the worst case scenario would be 2% of purchase price if they reassess upon sale so 2% is what I've used in my calculations. The rest of the expense, I went with standard numbers/what my realtor suggested for the area. I can't imagine investors are investing for this type of CoC so does this mean they are only buying for appreciation? I get rehabbing to unlock value is crucial in REI success, but as a first timer and out of state I'm just not up for that yet. With all of that being said, if I'm not up for buying for appreciation and not up for rehabbing, then I should probably hold off on buying now, right?

    I believe property taxes in Columbus, Ohio get reassessed every 3 years but I would speak to a local CPA.


     would you not get this info from the city or county tax collector or their website why would you talk to a CPA ?  Just curious is all my CPA would have no clue on property tax reassessments. 


     If I talk about taxes and do not say to talk to a CPA then I could get sued for giving tax advise

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    2Reply
  • Yinka Taiwo
    Rental Property Investor · Atlanta, GA · Member since 2022 · 52 posts · 16 votes
    4y

    @Nathan Grabau I'll contact you too

    1Reply
  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    4y

    KC. You'll be in C/B- areas to hit that

    1Reply
  • Conner Olsen
    Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes
    4y

    @Angel Wu I force a higher return on my properties by furnishing them and renting them monthly to longer term travelers like traveling nurses. I turned a property with a -5% CoC to a +16% CoC. You can even use a management company to be hands off just like a LTR.

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    4y
    Quote from @Remington Lyman:
    Quote from @Jay Hinrichs:
    Quote from @Remington Lyman:
    Quote from @Angel Wu:

    Anyone know of any markets with CoC of at least 8% without having to rehab? Is that even possible with today's interest rates? I'm new to this so need your input. I identified a hot market (Columbus OH) and analyzed many SFH/duplexes on and off market and found that the CoCs I'm getting are negative (A/B) to at best 2-3% (B-/C). One thing that is difficult to account for in my analysis is the actual property tax. My realtor has told me that the property taxes are based on assessed prices and that the county reassesses every 6 years, but that the worst case scenario would be 2% of purchase price if they reassess upon sale so 2% is what I've used in my calculations. The rest of the expense, I went with standard numbers/what my realtor suggested for the area. I can't imagine investors are investing for this type of CoC so does this mean they are only buying for appreciation? I get rehabbing to unlock value is crucial in REI success, but as a first timer and out of state I'm just not up for that yet. With all of that being said, if I'm not up for buying for appreciation and not up for rehabbing, then I should probably hold off on buying now, right?

    I believe property taxes in Columbus, Ohio get reassessed every 3 years but I would speak to a local CPA.


     would you not get this info from the city or county tax collector or their website why would you talk to a CPA ?  Just curious is all my CPA would have no clue on property tax reassessments. 


     If I talk about taxes and do not say to talk to a CPA then I could get sued for giving tax advise


     LOL i think your confusing ad valorim property tax with income tax  

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    2Reply
  • Steven Foster Wilson
    Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
    4y
    Quote from @Angel Wu:

    Anyone know of any markets with CoC of at least 8% without having to rehab? Is that even possible with today's interest rates? I'm new to this so need your input. I identified a hot market (Columbus OH) and analyzed many SFH/duplexes on and off market and found that the CoCs I'm getting are negative (A/B) to at best 2-3% (B-/C). One thing that is difficult to account for in my analysis is the actual property tax. My realtor has told me that the property taxes are based on assessed prices and that the county reassesses every 6 years, but that the worst case scenario would be 2% of purchase price if they reassess upon sale so 2% is what I've used in my calculations. The rest of the expense, I went with standard numbers/what my realtor suggested for the area. I can't imagine investors are investing for this type of CoC so does this mean they are only buying for appreciation? I get rehabbing to unlock value is crucial in REI success, but as a first timer and out of state I'm just not up for that yet. With all of that being said, if I'm not up for buying for appreciation and not up for rehabbing, then I should probably hold off on buying now, right?


    I just bought a deal on the MLS last week in Columbus OH that offers a 27% COC return. All we did was change the light fixtures and raise the rents.

    4Reply
  • David Leggett
    Real Estate Broker · Cleveland, OH · Member since 2018 · 227 posts · 133 votes
    4y
    I believe Steven is correct, you can still get some good cash flow in the Ohio markets such as Cleveland and Columbus, but they will have to be B- to C neighborhoods.  They're not as prevalent as they were a few years ago, but there is still good cash flow here and decent appreciation over the last few years.
    1Reply
  • Yinka Taiwo
    Rental Property Investor · Atlanta, GA · Member since 2022 · 52 posts · 16 votes
    4y

    @Conner Olsen what does your PM charge for long term traveler management?

    0Reply
  • Yinka Taiwo
    Rental Property Investor · Atlanta, GA · Member since 2022 · 52 posts · 16 votes
    4y

    @Steven Wilson this is great. Thanks for sharing. Is this a calculator tool or spreadsheet? Would like to replicate

    0Reply
  • Joe HammelBusiness Member
    Real Estate Agent · Metro Detroit, MI · Member since 2018 · 614 posts · 666 votes
    4y

    @Angel Wu

    Metro Detroit

    (my rental portfolio is here)

    Purchase: $80k-$130k

    Rent: $1200-$1500

    ROI: Double Digit

    Cash flow: couple hundred/month

    Appreciation: Double digit (for past 10 years, will gladly send data)

    Location: C, B- (suburbs and certain markets)

    We have over a dozen Fortune 500 companies just in Metro Detroit with huge Healthcare and Auto industries.

    The bad reputation comes from OOS investors wanting $20k D market properties.

    Investors can retire (FIRE) in a few years off these.

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    0Reply
  • Tyler Rasmussen
    Investor · Independence, IA · Member since 2016 · 103 posts · 88 votes
    4y

    If you're just looking for 8% CoC deals, you may want to consider investing in a syndication. For the syndications that we've set up, our investors get an 8% preferred rate of return, then half of the upside after that.

    1Reply
  • Conner Olsen
    Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes
    4y

    @Yinka Taiwo I self manage my property but I am starting a management company. For a monthly rental it'll cost 15%.

    1Reply
  • Steven Foster Wilson
    Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
    4y
    Quote from @Yinka Taiwo:

    @Steven Wilson this is great. Thanks for sharing. Is this a calculator tool or spreadsheet? Would like to replicate


     Hey Yinka, 

    It is a calculator I use. https://www.calculator.net/ren...

    1Reply
  • Nicholas MischPro Member
    Investor · Broadview Hts, OH · Member since 2016 · 310 posts · 280 votes
    4y

    Turnkey no, value add definitely! 

    1Reply
  • Angel Wu
    OP
    New to Real Estate · Los Angeles · Member since 2022 · 10 posts · 13 votes
    4y
    Quote from @Steven Foster Wilson:
    Quote from @Angel Wu:

    Anyone know of any markets with CoC of at least 8% without having to rehab? Is that even possible with today's interest rates? I'm new to this so need your input. I identified a hot market (Columbus OH) and analyzed many SFH/duplexes on and off market and found that the CoCs I'm getting are negative (A/B) to at best 2-3% (B-/C). One thing that is difficult to account for in my analysis is the actual property tax. My realtor has told me that the property taxes are based on assessed prices and that the county reassesses every 6 years, but that the worst case scenario would be 2% of purchase price if they reassess upon sale so 2% is what I've used in my calculations. The rest of the expense, I went with standard numbers/what my realtor suggested for the area. I can't imagine investors are investing for this type of CoC so does this mean they are only buying for appreciation? I get rehabbing to unlock value is crucial in REI success, but as a first timer and out of state I'm just not up for that yet. With all of that being said, if I'm not up for buying for appreciation and not up for rehabbing, then I should probably hold off on buying now, right?


    I just bought a deal on the MLS last week in Columbus OH that offers a 27% COC return. All we did was change the light fixtures and raise the rents.

    Assuming this was a triplex?
    0Reply
  • Steven Foster Wilson
    Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
    4y
    Quote from @Angel Wu:
    Quote from @Steven Foster Wilson:
    Quote from @Angel Wu:

    Anyone know of any markets with CoC of at least 8% without having to rehab? Is that even possible with today's interest rates? I'm new to this so need your input. I identified a hot market (Columbus OH) and analyzed many SFH/duplexes on and off market and found that the CoCs I'm getting are negative (A/B) to at best 2-3% (B-/C). One thing that is difficult to account for in my analysis is the actual property tax. My realtor has told me that the property taxes are based on assessed prices and that the county reassesses every 6 years, but that the worst case scenario would be 2% of purchase price if they reassess upon sale so 2% is what I've used in my calculations. The rest of the expense, I went with standard numbers/what my realtor suggested for the area. I can't imagine investors are investing for this type of CoC so does this mean they are only buying for appreciation? I get rehabbing to unlock value is crucial in REI success, but as a first timer and out of state I'm just not up for that yet. With all of that being said, if I'm not up for buying for appreciation and not up for rehabbing, then I should probably hold off on buying now, right?


    I just bought a deal on the MLS last week in Columbus OH that offers a 27% COC return. All we did was change the light fixtures and raise the rents.

    Assuming this was a triplex?

     Nope, this was a 4 bedroom 1.5 bath duplex per side. The 4-bed really pushed the value of rent! It came on the market, and I was able to act quickly and throw an offer in. If it had sat on the market it would have been bid up!

    0Reply
  • Angel Wu
    OP
    New to Real Estate · Los Angeles · Member since 2022 · 10 posts · 13 votes
    4y
    Quote from @Steven Foster Wilson:
    Quote from @Angel Wu:
    Quote from @Steven Foster Wilson:
    Quote from @Angel Wu:

    Anyone know of any markets with CoC of at least 8% without having to rehab? Is that even possible with today's interest rates? I'm new to this so need your input. I identified a hot market (Columbus OH) and analyzed many SFH/duplexes on and off market and found that the CoCs I'm getting are negative (A/B) to at best 2-3% (B-/C). One thing that is difficult to account for in my analysis is the actual property tax. My realtor has told me that the property taxes are based on assessed prices and that the county reassesses every 6 years, but that the worst case scenario would be 2% of purchase price if they reassess upon sale so 2% is what I've used in my calculations. The rest of the expense, I went with standard numbers/what my realtor suggested for the area. I can't imagine investors are investing for this type of CoC so does this mean they are only buying for appreciation? I get rehabbing to unlock value is crucial in REI success, but as a first timer and out of state I'm just not up for that yet. With all of that being said, if I'm not up for buying for appreciation and not up for rehabbing, then I should probably hold off on buying now, right?


    I just bought a deal on the MLS last week in Columbus OH that offers a 27% COC return. All we did was change the light fixtures and raise the rents.

    Assuming this was a triplex?

     Nope, this was a 4 bedroom 1.5 bath duplex per side. The 4-bed really pushed the value of rent! It came on the market, and I was able to act quickly and throw an offer in. If it had sat on the market it would have been bid up!

    Can I ask how your property tax is so low? 
    0Reply
  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    4y
    You can get the actual property tax amount if you go to the tax assessor's website for that county and plug in the address. All of that is public record.

    A CoC of 8% has gotten pretty hard for turnkeys, but it's not undoable. I'm working with turnkeys from a provider on the Illinois side of St. Louis-- all the properties hit the 1% rule (believe it or not) and most of them are at least 8% CoC. You can also try to put your own team together outside of the turnkey providers and try to get rent-ready/turnkey properties that way.

    It's not that everyone is suddenly investing for appreciation, but they are having to do a lot more thorough analyses of the other profit centers on a rental property outside of cash flow (the profit centers that actually make people wealthy in REI...cash flow by itself has never been what makes someone filthy rich). Appreciation is a big one, but the biggest one is the hedging against inflation. The more inflation goes crazy, the more profitable a property (with a fixed-rate mortgage) is.
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