Buy and Hold Cash on Cash Home-Runs

Houston, TX · Member since 2014 · 7 posts · 1 vote

Hey everyone,

I know this is a topic that's visited in many different places on the forum, but I'm hoping this thread can contain the most up to date stories on a specific kind of deal:

What do you consider a "Home-run" buy and hold opportunity for your market? I'm specifically looking at first year cash-on-cash yield (not worried about appreciation at this point).

I really appreciate the feedback; thanks,

Patrik

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Jon Klaus

Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes

12y

Originally posted by @Patrik Sefeldt:

That's pretty great stuff to hear from both of you. I'm trying to stay conservative throughout my thought process but it seems like there are quite a few stories involving huge returns.

Remember, home runs are outliers. Even the world's best power hitters only hit 1 for about every 15-20 times at bat. And they tend to strike out more. There's a place for home runs, but great fundamentals (including defense) win games.

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David Krulac
Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
12y
we had a property where the first year rent was 82% of the purchase price, I'd say that was a home run, but that's just me.
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Brie SchmidtBusiness Member
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Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
12y
I do conventional financing with 25% down and consider a good deal when the rental income per month is double my PITI monthly
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Patrik Sefeldt
OP
Houston, TX · Member since 2014 · 7 posts · 1 vote
12y
That's pretty great stuff to hear from both of you. I'm trying to stay conservative throughout my thought process but it seems like there are quite a few stories involving huge returns.
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Patrik Sefeldt
OP
Houston, TX · Member since 2014 · 7 posts · 1 vote
12y
I'm sure it's pretty obvious, but I pose the question because my friends and I want to make sure that when we evaluate our first investment, we have an idea about what a real success looks like. We don't want to use up all of our dry powder chasing a 14% cash on cash return when similar opportunities may yield much higher returns. I really appreciate the responses and I hope to hear many more.
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Jon Klaus
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
12y
Originally posted by @Patrik Sefeldt:
That's pretty great stuff to hear from both of you. I'm trying to stay conservative throughout my thought process but it seems like there are quite a few stories involving huge returns.

Remember, home runs are outliers. Even the world's best power hitters only hit 1 for about every 15-20 times at bat. And they tend to strike out more. There's a place for home runs, but great fundamentals (including defense) win games.
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Aaron Montague
Rental Property Investor · Brookline, MA · Member since 2013 · 1k+ posts · 777 votes
12y
@Patrik Sefeldt I'm always happy when a deal nets me $100/door and 15% ROI (cash on cash). I don't consider those home runs, but they will serve me well in the long term.

Home Runs show up once in a while, so chase those down while you have the chance. With several years of solid returns on your 14% deals, you'll have all the dry powder you need to chase the occasional 25-35% deal.
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Patrik Sefeldt
OP
Houston, TX · Member since 2014 · 7 posts · 1 vote
12y
Solid advice all around. The home-run will be tough in the Houston market right now with so many eyes on it, but it's good to know what what those high water marks look like.
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Patrik Sefeldt
OP
Houston, TX · Member since 2014 · 7 posts · 1 vote
12y
anymore details or stories out there? Literally every tiny bit of info is gold to me at this point.
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Andrew Sherwin
Alma, MI · Member since 2014 · 18 posts · 5 votes
12y
Originally posted by @Jon Klaus:

Originally posted by @Patrik Sefeldt:
That's pretty great stuff to hear from both of you. I'm trying to stay conservative throughout my thought process but it seems like there are quite a few stories involving huge returns.

Remember, home runs are outliers. Even the world's best power hitters only hit 1 for about every 15-20 times at bat. And they tend to strike out more. There's a place for home runs, but great fundamentals (including defense) win games.

Man I can't wait for Opening Day! Haha!!
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Jay Y.
Investor · Santa Clara , CA · Member since 2013 · 155 posts · 144 votes
12y
For me, a home run was landing any property in the Bay Area that was cash flow positive from Day 1 with just 20% or 25% downpayment.

Demand, jobs, appreciation... you get all that... it's the cash flow that's usually the hard part.
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