Condo/Single unit investment??

[Ryan Rossi]

I have been seeing some single units pop up here and there. (Condos?) I'll post the links below. I know the area pretty well and know what the rent is like for units in the area. Seems like almost a 40-50% cash flow a month. Is this type of investment something you guys/gals would consider a first good rental property? Here are a couple https://www.zillow.com/homedetails/1600-N-Wilmot-Rd-UNIT-194-Tucson-AZ-85712/8527875_zpid https://www.zillow.com/homedetails/1600-N-Wilmot-Rd-UNIT-410-Tucson-AZ-85712/8527904_zpid

[Cara Lonsdale]

Originally posted by @Etienne Martel:

Hey Ryan,

For my buy & hold investment deals, we try to have our rents at least 1% of our properties ARV. Do you have that on your deal?

What do the financials look like? 

I would be happy to help!

 Why did you adopt this method?  This is something floating around BP, but I can't seem to find it's origin.  This idea of 1% is silly, and I would really like to know the rationale behind it.

The reason why I push back is because taking a % of ARV doesn't provide a consistant figure as it doesn't take into account the equity position for the acquisition cost. For example, I have a unit that I acquired for $128K, put $22K into, and have a $108K loan on. ARV is $165K (reconfirmed by recent appraisal). With your analysis, I would need to have $1,650 per month in order for this to be a good deal. In yet, my mortgage payment is $624 per month, and I get $,1285 per month in rent. That is a SIGNIFICANTLY good cash flow! I would never reject that...and it didn't make your 1% rule.

So, again, please do share how you came up with this concept.  I would really like to pop this bubble floating around BP.