Return on Investment (ROI) vs. MAO
I have a real estate wholesaling coach that tells me that ROI return on investment is most important when gauging what price our buyers would buy at. The formula is
The Rent x 12years x .65 Divided by the ALL IN amount (that includes repairs).
If you come out with over a 20% return, then he says we're at a decent area to sell to those wanting to rent out the house. This seems very different than all the real estate books and information I've read about the MAO formula. Why is that so?
In St. Louis Missouri, it seems that there are a lot of people buying rental property over fixing and flipping. It seems like there are many investors that don't even accept houses with a good return, they want steals with a 30 or 40% ROI! Can anyone explain to me why my coach is doing ROI vs MAO? He seems to not even explain why he does MAO at all.