ARV % question

[Austin Lockard]

When trying to find deals for a buy and hold SFH do you use a higher ARV % than you would with a rehab and flip?

[Josh Sexton]

I approach it a bit differently and don't always abide by the 70% rule for a buy and hold property, as long as it is in good condition.  Rather, I look at what comparable homes in the area are selling for once they are fixed up and look decent.  I also look at what market rent is in the area.  From that, I figure my capitalization rate.  As long as it's higher than 7% or so, I know I can make money.  Some people prefer to look at cash flow and make sure you're able to make $200 a unit once mortgage and expenses are accounted for.

I know it can seem impossible to find a good deal sometimes, especially in a market that is moving as quickly as Houston.  Keep putting offers in.  If it's 10, 20, 30 offers a week, so be it.  Go ahead and low-ball people.  I've seen some accepted offers that are WAY below asking price.  Keep a positive attitude and eventually it will pay off.  Happy hunting!