Realtor · Loveland, CO · Member since 2016 · 20 posts · 10 votes
I'm interested in what you all are seeing for yearly ROI numbers on single family rentals in Northern Colorado. Do you have specific cities that are giving you a better ROI overall than others? I'm seeing Cap rates around 6-8% typically in the Loveland and Fort Collins areas based on market prices. Obviously cash-on-cash returns can improve by leveraging money, or by buying distressed properties and rehabbing them. Anyone have a favorite city for rentals, or is it just one deal at a time?
Realtor · Loveland, CO · Member since 2016 · 20 posts · 10 votes
10y
@Account Closed I'm using recent sales for a comparative value for the homes, and I'm using rental values and rent estimates to determine the gross income. If a $300k house rents for $1800-2000 per month that gives a gross return of 7-8% annually. When you estimate taxes, insurance, vacancy, and maintenance you end up in the 6-8% ballpark. This is the rate I'm seeing in this price range. I've done most of my research in this range because this is about median price in the Fort Collins/Loveland area.
@Account Closed I'm using recent sales for a comparative value for the homes, and I'm using rental values and rent estimates to determine the gross income. If a $300k house rents for $1800-2000 per month that gives a gross return of 7-8% annually. When you estimate taxes, insurance, vacancy, and maintenance you end up in the 6-8% ballpark. This is the rate I'm seeing in this price range. I've done most of my research in this range because this is about median price in the Fort Collins/Loveland area.
If I'm in a ballpark the most investing I'll do is for a beer or a hot dog. Seems like you are omitting a lot of operating expenses. Can you detail all your calculations for us on a property we can verify a sales price?
Also it looks like you are buying NOI that ranges from $18,000 to $24,000 for a $300,000 property. That is a pretty BIG range. If these $300,000 properties are truly comparable how do you account for such a large range in NOI ?
Now if I were to believe your cap rate comps, which you haven't produced then if I'm buying a $21,000 NOI at 6% I would be paying $350,000 but if I bought the same NOI at 8% then I would be paying $262,500. THAT'S $87,500 DIFFERENCE!!! Geez. What's up with that?
See how using guesstimates to calculate NOI gets you a CRAP rate?
Realtor · Loveland, CO · Member since 2016 · 20 posts · 10 votes
10y
Bob, my intent with this post is not to analyze deals, but to get feedback on rental returns relative to cities in my area. That is why I am using ballpark numbers. I fully realize that a difference of a couple percent in a Cap rate makes a huge difference. If I determine that one city has an average return that is 2% higher than another, I will focus my time and energy on that city.
Thanks for your input, but I don't see that you are really answering the question I asked.
Bob, my intent with this post is not to analyze deals, but to get feedback on rental returns relative to cities in my area. That is why I am using ballpark numbers. I fully realize that a difference of a couple percent in a Cap rate makes a huge difference. If I determine that one city has an average return that is 2% higher than another, I will focus my time and energy on that city.
Thanks for your input, but I don't see that you are really answering the question I asked.
Your question and analysis is flawed. "Returns"? How the heck are you measuring them? Do you want a PROFITABLE market. SF, NYC, LA or Honolulu are the place you want to be. For profit you want rising rents and appreciation.