Whats your return on investment?

Question

I am very interested in hearing about YOUR Real estate investment experience!

How much did you buy the property for/ what was your down payment and what are you actually cash flowing?

Where is the property located?

Was it a renovation?

I'd love to hear your story. I'm struggling to find houses that will do an annual 12% return in MA.

Thanks

Account Closed · Answer

Birmingham, Alabama 35215 (Built 1975)

3 Beds; 2 Baths; 1 Car Garage; 1,200 Sq. Ft. (Class C Property)

Price: $70,000 Rehab: $9,700 Value: $93,000

25% Down

Interest Rate: 4.25%; 30 Year Fixed Conventional

Rent: $905

Cash Flow: $401 (100% into my business account)

Warrensville Heights, Ohio 44128 (Built 1952)

4 Beds; 1.5 Baths; 1 Car Garage; 1,568 Sq. Ft. (Class C Property)

Price: $60,000 Rehab: $9,000 Value: $72,000

25% Down

Interest Rate: 4.5%; 30 Year Fix Conventional

Rent: $950

Cash Flow: $466

Dallas, Georgia 30157 (Built 1987)

4 Beds; 2 Baths; 1 Car Garage; 1,448 Sq. Ft. (Class B Property)

Price: $107,000 Rehab: $7,500 Value: $155,000

25% Down

Interest Rate: 4.25%; 30 Year Fix Conventional

Rent: $1,300

Cash Flow: $497

East Point, Georgia 30344 (Built 2018)

4 Beds; 2.5 Baths; 2 Car Garage; 1,812 Sq. Ft. (Class B Property)

Price: $150,990 Rehab: None; Value: $189,977

25% Down

Interest Rate: 4.875%; 30 Year Fixed Conventional

Rent: $1,425

Cash Flow: $411

Jake Svirsky · Answer

Account Closed what do you mean by kind of technology that would help me?

Jake Svirsky · Answer

Thanks Account Closed

I guess the market around me right now isnt producing the same cash flow. Ill be moving haha.

Account Closed · Answer

Yes, CASH FLOW, is a variable and rarely fixed.

Or at least for me, there seems to be an unexpected expense every month lol.

If you figured in a percentage for

vacancy factor

repairs & maint. reserve

capital expenditures reserve

my cash flow would be lower, but like I said I don't touch any of it as I don't need to right now in my career.

You don't have to move either to get into other markets for better cash flow, as technology can take care of that with various services.

Jacob Sampson · Answer

Great question @Jake Svirsky.  There are quite a few posts where people provide numbers on past purchases.  A tweak on this type of question which I find interesting are the following questions

1. What do people consider cash flow?  For example, if I have a good month with no extra expenses is that my cash flow?  What about a bad month where my cash flow is negative?  I assume most people try to estimate some average.  If that is the case what math do people use to estimate an average?  Here is what I consider long term cash flow.

Gross rent - (30% for vacancy, maint, and capex) - (Principle, Interest, taxes, and insurance) = long term average cash flow.

2. When you say you are looking for a 12% return, what do you mean by that?  Do you mean 12% COC?  If so, then realistically that number will change every month because your principal payment is profit that you are putting back into the property.  So, in theory our COC return goes down by a small amount each month because we have more and more of our own cash invested in the property.

3. Sorry for rambling, in answer to your actual question my most recent purchase was 2 x 4 plexes (C+ street within an A neighborhood) for $290k.  We will remodel one of the units for about 8k but the rest are rented.  Gross rent for both buildings is $5k.  This is a fairly standard purchase for my partner and I.  Neither is very handy and we both have full time jobs so we buy properties that don't need much work.  And we are willing to pay up to 60 X monthly rent for a rent ready property, which puts these 4 plexes right on target.

60 X monthly rent is our ideal, we have been willing to stretch a bit for what we would consider great properties.  Last I checked our portfolio as a whole (38 units) is running about 62 x monthly rent.

Whats your return on investment?

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