What Ratios in Current Market

Question

What ratios are you seeing in your current SFH analysis? We know the targets of 1% rule, 50% rule, cash on cash return and desired cash per door ~$100-200. As these are targets, I would like to know what you are encountering in the real world right now?

I am seeing most of these metrics fall on the lower end in the hot investor market, ~1%, ~50%, 4-6%CoC, & ~$50-100/door.

I am seeing most of these metrics fall on the lower end in the hot investor market, ~1%, ~50%, 4-6%CoC, & ~$50-100/door.

Todd Dexheimer · Answer

I would not deviate from those rules. The hotter the market, the more you need to stick to the rules.

Antoine Martel · Answer

Places like Memphis, Cleveland, St. Louis. I have property in all of these places.

Jieh Larson · Answer

I second @Todd Dexheimer's recommendation. You're playing with fire deviating from your standards. There's the rare find that sits around 1.3% but make sure you check your expenses. Taxes, flood insurance and other expenses will eat into that quickly. A good SFR is hard to come by in Houston, I'm only looking at multifamily now.

Antoine Martel · Answer

I have teams in each city. Properties come onto the market and then we make offers on them. Analyzing them myself by checking comps and rents, with the help of the team on the ground.

Antoine Martel · Answer

Bryan.

I am beating the 1% rule and $200/door/mo. But I am investing outside of Houston.

Vijaianand Thirunageswaram · Answer

Account Closed  Good question which everyone should be asking. Where your market sits in practicality compared to the ideal world right!! Let me talk about myself and my investors.

When it comes to my investment, I go both ways. I cannot wait for a perfect 70% ARV - Rehab cost for 30% margin flip in this market in certain areas. If you are getting all in 75% with 25% margin go for it. May be even 78% let's do it if I can get in and out quickly. You cannot just stick with norms and you sometimes cannot do business. Same with rental, if you can get a property with upfront equity and turn key rental, go and get it. Don't try to be nit picky on the numbers too close. It will work it out. I know some of you going to say that's not it should be done. Go and check BP Brandon's podcast, he have said many times that numbers shouldn't be only deciding factor. Use your commonsense approach as well.

At the same time when I work with investors for their rental or flip. I have to base their comfort ability level. It's their money and life. I can only guide them to the water,its up to them to drink or not. I won't force them if they don't want to take the dip and try to more safer than me. I been doing for a while so I know how to get in and out if things go other way.

Currently, I target for 1% or more but usually I am at 1.25 DSCR on rentals. DSCR will encompass all your cashflow and COC as well. On the flips, target for 25% but if anything comes for 15-20% quickly, will do it. Hope this helps.

What Ratios in Current Market

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