Is it really all about the good deals?

[Raeven S. Reivers]

Hello all,

With respect to finding good buy and hold deals, has one ever noticed a higher ROI with larger properties?

Larger meaning higher priced properties.

Obviously the monthly mortgage goes hand in hand with the price of the property but does the higher price make it a better deal?

Thanks

Raeven

[Blake Dailey]

I think agents oftentimes try to mark the price up to reflect the quality of the house. I don't necessarily think the higher price means higher returns. It can often mean the opposite, especially if rent is not rising with the price. With a higher priced home, you do have a bigger mortgage payment, which means you pay off more principal each month and thus build equity faster. But that equity growth will not matter if you pay $1M for a house that rents for $1k per month. I like to find that sweet spot, usually around the median priced property, where I can buy it under value and bring it up to the market value while renting for a proportionately high amount (aka 1% rule or greater). Usually past a certain point the higher priced homes do not make sense with what the house could rent for so it wouldn't make sense to buy as a rental for cash flow.