I have been telling my clients recently that buying for appreciation alone in this current market has a greater risk than I have seen in several years. Take a look at the FED prices of homes from 1965 through 2021 with a bit in 2022. The rise in prices during the past twenty-four months is the highest increase in U.S. history.
This tells me that not only are many properties overpriced for this market but a recovery could fall into that 10-year cycle. This means while you may go into this property very lean on ROI it may take years to hit your goal.
Buy a property offering lower than current market pricing now to give you a good start. It's all about the numbers.
Depends on your goals, but I personally would not put 86k into a deal that would only generate 3.85% COC. I'm generally looking at 10%+, but in this market I might go down to 8%, but it would need to have a lot of appreciation upside and be in a really good area.
Depends on your goals, but I personally would not put 86k cash into a deal that would only generate 3.85% COC. I'm generally looking at 10%+, but in this market I might go down to 8%, but it would need to have a lot of appreciation upside and be in a really good area.
Thanks for the inputs, Greg! I agree that the CoC is low, but ultimately, my goal is to hold forever, and this is a hot area, so I think appreciation & rent increases will really help here with CoC. I think it's going to start around 3% but as soon as I can get rents up in a few years it'd already be double digits.
Certainly good food for thought. I ought to come up with good standard values for CoC, cashflow etc., that help me weed deals out!
I have been telling my clients recently that buying for appreciation alone in this current market has a greater risk than I have seen in several years. Take a look at the FED prices of homes from 1965 through 2021 with a bit in 2022. The rise in prices during the past twenty-four months is the highest increase in U.S. history.
This tells me that not only are many properties overpriced for this market but a recovery could fall into that 10-year cycle. This means while you may go into this property very lean on ROI it may take years to hit your goal.
Buy a property offering lower than current market pricing now to give you a good start. It's all about the numbers.
I have been telling my clients recently that buying for appreciation alone in this current market has a greater risk than I have seen in several years. Take a look at the FED prices of homes from 1965 through 2021 with a bit in 2022. The rise in prices during the past twenty-four months is the highest increase in U.S. history.
This tells me that not only are many properties overpriced for this market but a recovery could fall into that 10-year cycle. This means while you may go into this property very lean on ROI it may take years to hit your goal.
Buy a property offering lower than current market pricing now to give you a good start. It's all about the numbers.
Agreed... I definitely would not buy anything in this market with the primary objective being appreciation. To clarify my point, I would be willing to drop a bit in my COC expectations **if** the property is beach/ waterfront, in an extremely desirable area - a blue chip kind of property. But even then, I need at least 7-8% COC, but that's just me. I know other people have different requirements for their deals.
I have been telling my clients recently that buying for appreciation alone in this current market has a greater risk than I have seen in several years. Take a look at the FED prices of homes from 1965 through 2021 with a bit in 2022. The rise in prices during the past twenty-four months is the highest increase in U.S. history.
This tells me that not only are many properties overpriced for this market but a recovery could fall into that 10-year cycle. This means while you may go into this property very lean on ROI it may take years to hit your goal.
Buy a property offering lower than current market pricing now to give you a good start. It's all about the numbers.
Agreed... I definitely would not buy anything in this market with the primary objective being appreciation. To clarify my point, I would be willing to drop a bit in my COC expectations **if** the property is beach/ waterfront, in an extremely desirable area - a blue chip kind of property. But even then, I need at least 7-8% COC, but that's just me. I know other people have different requirements for their deals.
Depends on your goals, but I personally would not put 86k cash into a deal that would only generate 3.85% COC. I'm generally looking at 10%+, but in this market I might go down to 8%, but it would need to have a lot of appreciation upside and be in a really good area.
Thanks for the inputs, Greg! I agree that the CoC is low, but ultimately, my goal is to hold forever, and this is a hot area, so I think appreciation & rent increases will really help here with CoC. I think it's going to start around 3% but as soon as I can get rents up in a few years it'd already be double digits.
Certainly good food for thought. I ought to come up with good standard values for CoC, cashflow etc., that help me weed deals out!
Cheers,
Got to be careful with this plan. Rents are already at all-time highs. If you think rents are going to increase as they have the last couple of years, you're taking a big risk. It's obviously up for debate, but it's within the realm of possibilities that rents flatten out or even decrease in the coming years. Just be modest with your rent projections.
Depends on your goals, but I personally would not put 86k cash into a deal that would only generate 3.85% COC. I'm generally looking at 10%+, but in this market I might go down to 8%, but it would need to have a lot of appreciation upside and be in a really good area.
Thanks for the inputs, Greg! I agree that the CoC is low, but ultimately, my goal is to hold forever, and this is a hot area, so I think appreciation & rent increases will really help here with CoC. I think it's going to start around 3% but as soon as I can get rents up in a few years it'd already be double digits.
Certainly good food for thought. I ought to come up with good standard values for CoC, cashflow etc., that help me weed deals out!
Cheers,
Got to be careful with this plan. Rents are already at all-time highs. If you think rents are going to increase as they have the last couple of years, you're taking a big risk. It's obviously up for debate, but it's within the realm of possibilities that rents flatten out or even decrease in the coming years. Just be modest with your rent projections.
Great inputs! thanks again!
I'm aiming to be conservative enough such that anything better than my estimations is simply 'good news'
*This link comes directly from our calculators, based on information input by the member who posted.
Not for me , as ALL my rentals are 20% + NET caps, and this is based on cash purchase of about 60- 85k, This is about 3% COC, not a good deal, ALL THE BEST TO YOU
I have been telling my clients recently that buying for appreciation alone in this current market has a greater risk than I have seen in several years. Take a look at the FED prices of homes from 1965 through 2021 with a bit in 2022. The rise in prices during the past twenty-four months is the highest increase in U.S. history.
This tells me that not only are many properties overpriced for this market but a recovery could fall into that 10-year cycle. This means while you may go into this property very lean on ROI it may take years to hit your goal.
Buy a property offering lower than current market pricing now to give you a good start. It's all about the numbers.
Hi William thanks so much for the insights.
I’ve come to pass on this deal and will look again today for another with better total figures!
@Tyler Dietrich there are a lot of different metrics and ways you can evaluate deals. I personally keep it simple, the main metric I'm looking at is COC. I'm not worried about CAP, GRM, etc. I look at NET profits (profits after all operating expenses) and do my COC calcs.
It's important to consider vacancy and repairs as well, but those are hard to predict. I look at those case-by-case depending on the type of property, quality of tenant pool, age and quality of construction, etc.