All Forum Posts by: Andrew Kiel

Several things I look at/consider:  Cash on cash return must meet a minimum standard.  Net monthly cash flow must also meet a minimum standard.  Does the property fit our model? (we do only single family homes in a specific area).  Do I have the down payment available or can I JV with someone who does?  How much do I need to put in the property (repairs/improvements) to be able to fill it?
One other key thing I like to look at is the rate I can recapture a vacancy.  I'm sure there is some name/ratio for this but it looks like this: if I get $1500/mo and my payment is $1000 it would only take two months to recapture a one month vacancy (good).  If the income is $2500/mo and my payment is $2000/mo it would take 4 months to recapture the same one month vacancy (not so good).  Same net cash flow, but bad vacancy recapture (at least for my market). 
Personally, I couldn't care less about Cap rate - that might be a great way to make an apples/apples comparison of properties but for me, it's about (leveraged) cash flow.  And that is very loan/interest rate dependent.  We're buying homes today that wouldn't have worked as well 2-3 years back; simply because I can cash flow these homes MUCH better based on 3.5% interest rates.
These answers need to be very specific to your investment goals AND your market.  Some markets are very easy to hit the 1% rule (IE 100k house rents for 1k) but appreciation might be harder to get (many midwest cities are like this).  Other markets may be difficult, if not impossible to hit the 1% rule but the appreciation may be better.
Know your strategy, know your market, get a winning formula, and repeat.

@Jesus Orozco - We have a fair amount of experience with JV agreements on both houses and land in Tucson. I sent you a PM with contact information, feel free to reach out.

@Cade Olof - Yes, that's after expenses.  We run a lease with option to buy model so we are able to keep expenses to a bare minimum.  I've sent you a PM in case you would like to chat.

Single family can still be a great way to go in my opinion.  If you can get a conforming loan in the 2% range for owner occupied or an investor rate in the 3% range the numbers will work on the right house.  We are still buying homes on the East and South sides of Tucson that can cash flow $500-$700 per month.  I know the numbers work a little differently for an owner occupied house hack - but they should still work very well IF you find the right house.  The key is pay a little more for the 3-4 bedroom homes with some extra square footage - don't go too small (or too cheap).

The house we took over subject to with VA financing when others tried to tell the sellers to just let the house go into foreclosure. Seller was active military with a security clearance - we were told we saved her career by taking over the payments. Oh, we continue to make $600 a month net on that home too.

Here is a link to the AZ REIA page - great group with many subgroups and meetups.

https://azreia.memberize.net/c...

@Ryan Medeiros I think I may know of one coming up on the Eastside.  I know little of how assisted living homes work so I don't know what 10 beds means - the one I know of is a 5-6 bedroom home.  Feel free to reach out to me in that could work.

I get the impression this may be a better fix & flip project than a buy and hold. I was able to find the property on Zillow, and it looks to me like this is an amazing deal at $260k and based on your rehab projections. I'm just not sure if renting it out is the best long term strategy. Personally, I'm not a flipper, and would think the best use of the $480k ARV would be to sell and put the cash back in your pocket. You could then roll it into something that gives you better monthly cash flow.

Hi @Bethany Virago.  Glad you already met @Patrick Allen, he runs a great new investor sub group with AZREIA - which is an amazing group!  I sent you a private message as well, feel free to reach out.  We're always happy to talk with new investors in the area.

@Samuel Hopkins - We always use a long term lease option when we fill a house.  This allows us to get 20-30% above normal market rent, much lower rehab costs, and virtually no maintenance & repairs.  We also remind the landlords to keep in mind their maintenance & repair costs when calculating return - as the note will never have that.