$100 dollars a door?!?

Rental Property Investor · Racine, WI · Member since 2012 · 27 posts · 21 votes

I wanted to see what everyone's thoughts were as far as how much per door you look to get on an investment.

Do you look to make at least $100 dollars a door after all is paid (Mortgage, Taxes, Insurance, Property Management, Repair %, Vacancy %, etc..) ?

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Thomas S.

Member since 2016 · 13k+ posts · 12k+ votes

When I analyse a potential property I start out assuming 50% expenses and debt repayment based on 100% financing on a 30 year. If those rough numbers do not show a minimum $100/door I don't bother looking any farther. If you do not base your calculations on 100% financing 30 year then you are not calculating the cash flow produced by the property itself. You can not include cash flow purchased with equity, as @Michael Plante includes, since it is NOT produced by the property.

Always keep in mind when investing in income properties that every property has two separate income streams. On is the property itself the other is your own cash sitting as dead equity. Two distinct income sources that must be separated to be able to assess the true value of a property. If you do not separate them then any fool can throw as much cash as needed to "polish a turd".

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Dennis M.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
8y
@Ryan Behnke 100$ isn’t worth the trouble it’s gotta be 200 at the very least per door
8 Reply
Michael Kistner
Rental Property Investor · Lodi, CA · Member since 2018 · 206 posts · 115 votes
8y
@Ryan Behnke
I worry about my overall cash flow. I look for at least the 1% rule and if it passes that I’m good.
But because I don’t rely on the money from the rentals I’ve staggered my loans; 10, 15, 20, and 30 year loans.
The 10 and 15 year loans don’t cash flow like the 20 or 30 year loans but I’m happy with my overall cash flow each month.
That’s just how I’ve structured my deals. Hope that helps!
- Mike
6 Reply
Ryan Behnke
OP
Rental Property Investor · Racine, WI · Member since 2012 · 27 posts · 21 votes
8y
@Dennis M. Is there any reasoning behind $200 a door? I’m also talking about 2-4 units.
0 Reply
Dennis M.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
8y
Because 100$ dollar a door properties quickly go into negative territory . You need more cushion in 2018 . Ten years ago 100$ a door worked
2 Reply
Michael Kistner
Rental Property Investor · Lodi, CA · Member since 2018 · 206 posts · 115 votes
8y
@Ryan Behnke
If this is your first deal and it’s a 30 year loan $100 a door isn’t enough. @Dennis M. is correct. One simple call out and you’re breaking even. I should have led with that first.
3 Reply
Ryan Behnke
OP
Rental Property Investor · Racine, WI · Member since 2012 · 27 posts · 21 votes
8y
@Michael Kistner I’m looking for my 4th property. I had my first three a little over 10 years ago. But when I look at properties now it’s hard to find anything that makes over $100 a door unless it’s a D class.
0 Reply
Michael Kistner
Rental Property Investor · Lodi, CA · Member since 2018 · 206 posts · 115 votes
8y
@Ryan Behnke
With that many doors then I refer back to my original post lol I’ve had to start looking out of state to find deals making more than $100 a door so I understand.
Good luck!
1 Reply
Alexander FelicePro Member
Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
8y
the per door rate is an incredibly oversimplified view of the financials a project will produce.
What's the expense ratio?
does it include depreciation and amortization?
what amount of leverage is included?
How does it fit into the larger strategy? both for this unit, and the next one?
What if you U/W for $100 a door and real world produces much more....or less?!
would you take $100/door if you also made a 50% increase in equity?
What if I had zero invested and got $100/door, on 300 doors?
to answer the original question. Yeah I'll take $100/per door all day long, after a proper analysis and the deal makes sense.
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10 Reply
Ryan Behnke
OP
Rental Property Investor · Racine, WI · Member since 2012 · 27 posts · 21 votes
8y
@Alexander Felice I agree there are more factors to consider. I was more wondering if $100 a door is worth looking into at face value when running the basic numbers before digging into actual numbers of a deal. Also $100 a door on 300 doors with 0 invested? How do you do that?
1 Reply
Michael Plante
Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes
8y
I do $1000+/door but I pay cash
9 Reply
Ryan Behnke
OP
Rental Property Investor · Racine, WI · Member since 2012 · 27 posts · 21 votes
8y
@Michael Plante that’s awesome!
1 Reply
Ryan Behnke
OP
Rental Property Investor · Racine, WI · Member since 2012 · 27 posts · 21 votes
8y
@Michael Plante did you do well on a property and just use that nest egg to keep investing?
2 Reply
Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
8y
When I analyse a potential property I start out assuming 50% expenses and debt repayment based on 100% financing on a 30 year. If those rough numbers do not show a minimum $100/door I don't bother looking any farther. If you do not base your calculations on 100% financing 30 year then you are not calculating the cash flow produced by the property itself. You can not include cash flow purchased with equity, as @Michael Plante includes, since it is NOT produced by the property.
Always keep in mind when investing in income properties that every property has two separate income streams. On is the property itself the other is your own cash sitting as dead equity. Two distinct income sources that must be separated to be able to assess the true value of a property. If you do not separate them then any fool can throw as much cash as needed to "polish a turd".
13 Reply
Ryan Behnke
OP
Rental Property Investor · Racine, WI · Member since 2012 · 27 posts · 21 votes
8y
@Thomas S. I like it! Thanks for the input!
1 Reply
Caleb Heimsoth
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
8y
@Ryan Behnke. I wouldn’t get out of bed for a hundred bucks. 200 minimum. Prefer closer to 300
7 Reply
Kon Zel
Rental Property Investor · NJ · Member since 2018 · 152 posts · 56 votes
8y
People keep tossing out random numbers but there has to be more to the analysis than just the cash flow per door per month. Is $100 on a $100,000 cash outlay a good return? I personally don't think so.
Someone mentioned the 1% rule, however if other expenses such as property taxes or maintenance are large, it might still not cash flow.
Every deal needs to be analyzed in its own right to see if you're comfortable with the risk/return.
5 Reply
Michael Plante
Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes
8y
Originally posted by @Ryan Behnke:
@Michael Plante did you do well on a property and just use that nest egg to keep investing?
I made money in an online business
Then invested in houses to fix up and rent. Average is for each 50k invested, receive approx $1000 per month
5 Reply
Joseph M.
Flipper/Rehabber · Los Angeles, CA · Member since 2009 · 1k+ posts · 732 votes
8y
@Michael Plante You are able to bring in $1000 cashflow after expenses on $50,000 cash investment in FL these days ? Or maybe I read it wrong .
2 Reply
Kon Zel
Rental Property Investor · NJ · Member since 2018 · 152 posts · 56 votes
8y
Originally posted by @Joseph M.:
@Michael Plante
You are able to bring in $1000 cashflow after expenses on $50,000 cash investment in FL these days ? Or maybe I read it wrong .
That's how I read it as well and it seems awfully high.
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Dennis M.:

Because 100$ dollar a door properties quickly go into negative territory . You need more cushion in 2018 . Ten years ago 100$ a door worked
in non appreciating or areas with historic pricing that really never moves IE local investors all back into the deals the same.. 100. a door never really worked.. you one bad turnover or a few months skipped rent or eviction from going negative.. and if there is no upward movement in value and I mean REAL appreciation not just 3% a year on 50k home that's a whopping 1,500 which you would never realize. then 100 a month in my mind never worked .. and will never work.. long term in these asset class's
give me 100 a month in historic areas of reasonable appreciation and tenants that actually pay on time every time and don't trash houses.. then yes you controlling a valuable asset that can realistically be put on MLS and turned to cash in 30 to 60 days without being hammered by a local wholesaler or investor who will never over pay and just wants a screaming deal or they wont buy them.
so if you buy for 100 a month and the locals who are in tune to the market will only buy if they can get 200 a month and if rents are basically static which they are in most of these markets.. what has to give is your equity if you need to exit.. or wish to exit.. IE you lose money..
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Joseph M.:
@Michael Plante
You are able to bring in $1000 cashflow after expenses on $50,000 cash investment in FL these days ? Or maybe I read it wrong .
I suspect that's gross rent.. then take out expenses.. this is still semi possible in rougher areas.. where the market is pricing for risk of tenant.. the question is how consistent is that renter in those assets.. it can happen though.. but pretty far and few between in the big MSA areas..
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Michael Plante
Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes
8y
Originally posted by @Joseph M.:
@Michael Plante
You are able to bring in $1000 cashflow after expenses on $50,000 cash investment in FL these days ? Or maybe I read it wrong .
Yes
Move a used mobile home onto a couple acres. Then set it up so the tenent can have a horse
Or a beat up mobile home on a few acres, Fox it up and make ready for a horse and rent it
Full background check and FICO score on all tenents
Properties are also appreciating. FL is crazy like this.
But they are harder and harder to find
Gross rent $1300 - $1500
5 Reply
David H.
Madisonville, LA · Member since 2018 · 125 posts · 71 votes
8y
@Michael Plante That's pretty awesome, I'd take half that cash flow!! So your dealing with more the outskirts of town lower income versus the run down inner city higher crime areas
1 Reply
Joseph M.
Flipper/Rehabber · Los Angeles, CA · Member since 2009 · 1k+ posts · 732 votes
8y
@Michael Plante
Interesting and creative strategy!
1 Reply
Account Closed
Realtor · Detroit, MI · Member since 2015 · 211 posts · 104 votes
8y
@Ryan Behnke if you’re buying in Ohio you should be able to find something way more than $100/door. I can connect you with a Cleveland agent or consider Detroit you can get at least $400/door if not more
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