Wholesaler · Baltimore, MD · Member since 2016 · 22 posts · 23 votes
To any of the landlords on here. Lately I've been getting offers from sellers with rental units. Now I know how to do the numbers and figure out the CAP RATE and the COC but what Cap rate or COC do you look for when your purchasing a cashflow rental unit. What Cap Rate do you look for when you purchase properties ? 2%, 5%, 10%, etc? Let me know everything that needs to take place of what do you need the numbers to be to make you want to buy a cashflow property and also Timeframe I know that's a factor as well for how soon you expect to make your investment back for it to be a go or a good deal. And I need actual time lengths like 3yr, 5, 10yr, 15yrs etc. What Timeframe do you look for to make your money back? Not just the sooner the better I need to know realistic timeframes when I'm talking to sellers so that I'll know if its a good deal or not.
I like to see greater than 15% COC. Cap is just what the market is trading at. Kind of like comps. It shouldn't be used as a measure of return, but it often is. I might accept a B+ multi family in a great location with indicators of growth at a lower rate of return, whereas I would demand more from a C class in a less healthy area. Tough to quantify for you unless we are talking about a specific market, neighborhood and property.