$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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Account Closed
Realtor · Detroit, MI · Member since 2015 · 211 posts · 104 votes
8y
@Ryan Behnke sorry that was really speaking about cash, but depending on how much your mortgage and purchase price is.
1 Reply
Michael Plante
Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes
8y
Originally posted by @David H.:
@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
Yes out in the country
I wouldn’t say lower income. Last two tenents make over 100k/ year.
I think it is a niche for people who love their horse but for one reason or another they don’t purchase a home
2 Reply
David H.
Madisonville, LA · Member since 2018 · 125 posts · 71 votes
8y
@Michael Plante Interesting, I live in an area that has that type of scenario. I will have to look into that. Thx
2 Reply
Allyson Straka
Allentown, PA · Member since 2018 · 29 posts · 9 votes
8y
Originally posted by @Ryan Behnke:
@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.
This is exactly the problem we are encountering as well. Although this may be the case and it can cause frustration, I'm determined to not let it sway my purchase criteria.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Michael Plante:

Originally posted by @David H.:
@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
Yes out in the country
I wouldn’t say lower income. Last two tenents make over 100k/ year.
I think it is a niche for people who love their horse but for one reason or another they don’t purchase a home
Love the horse angle.. congrats well done.. nice thinking outside the box..
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Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
8y
All of my sfrs have cash-flowed less than $100/mo, but I paid less than market value, the principal paydown was much more than $100 each month and they've appreciated nicely. Multis need for be closer to $200 with 10% down. Depends on the asset and if you are going in with equity or not. Never pay retail.
Sometimes I'll purposely choose a 15yr loan. One reduced my cf $92/mo, basically to $0, but accelerated my loan paydown over $800/mo and will save me $180,000 in interest. Many more factors than cf as mentioned. IRR is the focus of the wealthy IMO.
2 Reply
Mike Dymski
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
8y
Many investors are adding value and generating 5-10 years worth of $100 monthly cash flows..in the 1st year of ownership. To them, REI is a lot easier than $100/mth and precise execution.
4 Reply
Chris Virgil-Stone
Rental Property Investor · Cape Coral, FL · Member since 2015 · 206 posts · 83 votes
8y
As mentioned $100/door might not provide enough to alleviate from unexpected events (even assuming capex, vacancy, etc is included in expenses). You also need to determine what your time is worth and your reason for investing (cash flow, appreciation, etc). Need to determine the cash on cash return...so it depends on your $ investment in the property. I would not spend the time on a $100 door investment, as it would probably take good amount of effort and time that could be spent on an investment making $2-400/door.
1 Reply
Rachel H.
San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
8y
@Ryan Behnke Depends on your own criteria. Each investor is different. Exit strategy and goals may not be the same. For me personally, it's usually around 4x that amount. But like @Michael Plante I also pay cash. Good luck!
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Christopher Leon
Realtor · Schaumburg, IL · Member since 2011 · 289 posts · 118 votes
8y
@Ryan Behnke I think this sort of depends on where your at with your portfolio. Personally, I have never focused on a dollar per door as I have come to terms with ‘buying today, for tomorrow’. My focus has moreso been on buying the right product that I can manage and mantain cost effectively. Just this year, I purchased one unit that is slightly a negative cash flow after all my conservative underwriting - I got 100% financing on it with a 30yr Am. I also secured $25k in equity buying it! To me it was a no brainer - had I focused on dollar per door I wouldn’t of been able to see this opportunity. Because of how my portfolio performs currently, I can afford to take on a “risk” like this - if you can even call it that. So I think it really depends on the performance of your portfolio, you might be able to absorb a “little shock” to your cash flow with the trade off of picking up another door. It’s not a bad idea to say “$100 per door” or whatever number, but at least in my market, you want to get your hands on as much as you can, that your able to manage and maintain cost effectively of course.
2 Reply
Austin P.
Rental Property Investor · Los Angeles, CA · Member since 2018 · 74 posts · 33 votes
8y
@Thomas S. when you analyze a property with 100% financing on a 30 year loan, what interest rate do you typically use?
1 Reply
Aubrey H.
Rental Property Investor · IA · Member since 2018 · 35 posts · 26 votes
8y
@Ryan Behnke I would say it depends on where you want your rental properties to take you (is it a side thing or your full time job?) We on average get $100 a door but with that being said we live in one unit and have family living for free in another unit so we are more then ok with our low return at this time. This is also more a retirement plan for us or we are looking more at the equity we are gaining (that others are paying).
1 Reply
Elenis Camargo
Property Manager · Jacksonville, FL · Member since 2018 · 514 posts · 470 votes
8y
@Ryan Behnke I look for over $300 per door. If you can’t find anything above $100 in your area then try investing out of state or at least in another city.
1 Reply
Sun Kim
Investor · Dublin, CA · Member since 2015 · 8 posts · 2 votes
8y
From what I see there is no way to make 1% in my area in Dublin, CA. You'd be lucky not to have a negative $2k per month.
1 Reply
Jim C.
Investor · Soldotna, AK · Member since 2015 · 103 posts · 64 votes
8y
what is the 1% rule?
1 Reply
Ben Sosa
Member since 2018 · 6 posts · 2 votes
8y
@Caleb Heimsoth exactly! No even for $300 dollars a door. I really don’t understand how some people are taking that responsibility for $100
1 Reply
Kai Van Leuven
Investor · USA · Member since 2015 · 325 posts · 447 votes
8y
@Ryan Behnke I purely invest for equity and let the cashflow take care of its self. If I am positive on monthly CF then I am good. I also would not buy in a junkie area to meet some rule. I could easily buy a few different asset classes to meet the 1% or 100/mo rule. I think both are silly. If you are buying right you don’t have to worry. You just have to find out what “right” is.
1 Reply
Ryan Behnke
OP
Rental Property Investor · Racine, WI · Member since 2012 · 27 posts · 21 votes
8y
Thank you everyone for your feedback! There are many thoughts and ideas in this thread. I like the discussion it started.
From what I see $100 a door isn't a must but more a variable into an equation and sometimes not even part of the equation.
- Depending if you are a cash buyer or financing that variable could be different.
- Depending if your goal is monthly cash flow or equity that variable could be different.
- Depending on the area of the of the world you are investing in that variable could be different.
- Depending on the class type of property that variable could be different.
2 Reply
Cody L.
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
8y
Originally posted by @Ryan Behnke:
@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?
I have more than $100/door on more than 300 doors with less than $0 invested.
Buy right, add value, refi at more than purchase+rehab cost, sit on resulting cash flow. I realize it's easier said than done but it's doable. I do it all the time. Any property I've owned more than 1-2 years (and some even sooner) have been refi'd where proceeds exceed my purchase price.
You just have to be in a strong cash position (via your $, HML, F&F) to strike when the right value add deal is found.
2 Reply
Cody L.
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
8y
Originally posted by @Jim C.:

what is the 1% rule?
Purchase price shouldn't be more than 100x rent. (conversly, rent should be at least 1% of purchase price)
i.e., $100k home rents for $1000/month = 1% rule. If it rents for $1200, it's "better than 1%". If it rents for $800, it's "worse than 1%".

I use that rule of thumb all the time. I bought a $6m property that I'd expect at least $60k/month of rent roll. It's actually $120k/month. so 2% rule. And this is near city center in Houston TX with plenty of land and appreciation.
I try not to be a strict rule of thumb buyer but bottom line, unless it's an A or NNN deal, a property will almost never cash flow if it isn't a 1% deal. Unless you're so heavy cash into the deal that your returns are crap -- which is just another piled on negative.
1 Reply
Dennis M.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
8y
Originally posted by @Cody L.:

Originally posted by @Ryan Behnke:
@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?
I have more than $100/door on more than 300 doors with less than $0 invested.
Buy right, add value, refi at more than purchase+rehab cost, sit on resulting cash flow. I realize it's easier said than done but it's doable. I do it all the time. Any property I've owned more than 1-2 years (and some even sooner) have been refi'd where proceeds exceed my purchase price.
You just have to be in a strong cash position (via your $, HML, F&F) to strike when the right value add deal is found.
Cody ,Some day your going to have to sit down and write a book on how that is done in detail
1 Reply
Jim C.
Investor · Soldotna, AK · Member since 2015 · 103 posts · 64 votes
8y
Originally posted by @Cody L.:

Originally posted by @Jim C.:
what is the 1% rule?
Purchase price shouldn't be more than 100x rent. (conversly, rent should be at least 1% of purchase price)
i.e., $100k home rents for $1000/month = 1% rule. If it rents for $1200, it's "better than 1%". If it rents for $800, it's "worse than 1%".

I use that rule of thumb all the time. I bought a $6m property that I'd expect at least $60k/month of rent roll. It's actually $120k/month. so 2% rule. And this is near city center in Houston TX with plenty of land and appreciation.
I try not to be a strict rule of thumb buyer but bottom line, unless it's an A or NNN deal, a property will almost never cash flow if it isn't a 1% deal. Unless you're so heavy cash into the deal that your returns are crap -- which is just another piled on negative.
Thanks @cody L.
Is the 1% total rent for multifamily or average per unit?
In other words I'm looking at a 4plex which rents at 800/unit. Is a good purchase price $80,000 (1%/unit) or $320,000 (1% of total rent from 4 doors)
ok 80k is a much better price but which formula are you referring to
1 Reply
Cody L.
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
8y
Originally posted by @Jim C.:

Originally posted by @Cody L.:
Originally posted by @Jim C.:

what is the 1% rule?
Purchase price shouldn't be more than 100x rent. (conversly, rent should be at least 1% of purchase price)
i.e., $100k home rents for $1000/month = 1% rule. If it rents for $1200, it's "better than 1%". If it rents for $800, it's "worse than 1%".

I use that rule of thumb all the time. I bought a $6m property that I'd expect at least $60k/month of rent roll. It's actually $120k/month. so 2% rule. And this is near city center in Houston TX with plenty of land and appreciation.
I try not to be a strict rule of thumb buyer but bottom line, unless it's an A or NNN deal, a property will almost never cash flow if it isn't a 1% deal. Unless you're so heavy cash into the deal that your returns are crap -- which is just another piled on negative.
Thanks @cody L.
Is the 1% total rent for multifamily or average per unit?
In other words I'm looking at a 4plex which rents at 800/unit. Is a good purchase price $80,000 (1%/unit) or $320,000 (1% of total rent from 4 doors)
ok 80k is a much better price but which formula are you referring to
Obviously per unit. If I buy a 100 unit building that averages $800/unit/month I’d pay, at most, $80k/unit (8,000,000). Obviously I wouldn’t need to pay $80k total for the whole place.
This is just a general rule of thumb I’ve found to be the max you can pay and still cash flow with any decent leverage
0 Reply
Cody L.
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
8y
Originally posted by @Dennis M.:

Originally posted by @Cody L.:
Originally posted by @Ryan Behnke:
@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?
I have more than $100/door on more than 300 doors with less than $0 invested.
Buy right, add value, refi at more than purchase+rehab cost, sit on resulting cash flow. I realize it's easier said than done but it's doable. I do it all the time. Any property I've owned more than 1-2 years (and some even sooner) have been refi'd where proceeds exceed my purchase price.
You just have to be in a strong cash position (via your $, HML, F&F) to strike when the right value add deal is found.
Cody ,Some day your going to have to sit down and write a book on how that is done in detail
Maybe some day. But honestly there are 100000 people that have written books that focus on building their personal brand. I don’t really focus on that
0 Reply
Jim C.
Investor · Soldotna, AK · Member since 2015 · 103 posts · 64 votes
8y
Originally posted by @Cody L.:

Originally posted by @Jim C.:
Originally posted by @Cody L.:

Originally posted by @Jim C.:
what is the 1% rule?
Purchase price shouldn't be more than 100x rent. (conversly, rent should be at least 1% of purchase price)
i.e., $100k home rents for $1000/month = 1% rule. If it rents for $1200, it's "better than 1%". If it rents for $800, it's "worse than 1%".

I use that rule of thumb all the time. I bought a $6m property that I'd expect at least $60k/month of rent roll. It's actually $120k/month. so 2% rule. And this is near city center in Houston TX with plenty of land and appreciation.
I try not to be a strict rule of thumb buyer but bottom line, unless it's an A or NNN deal, a property will almost never cash flow if it isn't a 1% deal. Unless you're so heavy cash into the deal that your returns are crap -- which is just another piled on negative.
Thanks @cody L.
Is the 1% total rent for multifamily or average per unit?
In other words I'm looking at a 4plex which rents at 800/unit. Is a good purchase price $80,000 (1%/unit) or $320,000 (1% of total rent from 4 doors)
ok 80k is a much better price but which formula are you referring to
Obviously per unit. If I buy a 100 unit building that averages $800/unit/month I’d pay, at most, $80k/unit (8,000,000). Obviously I wouldn’t need to pay $80k total for the whole place.
This is just a general rule of thumb I’ve found to be the max you can pay and still cash flow with any decent leverage
I'm new to this game so nothing is "obvious" to me, thats why I ask questions. And why my question was based around a 4 plex, NOT a 100 unit building. But thanks for stepping off your high horse to answer, I know it must have been tough for you...
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