All Forum Posts by: Marcos De la Cruz

For a single-family rental (SFR) that's free and clear, meaning no mortgage, the acceptable minimum annual cash flow depends on your investment goals, location, and risk tolerance. However, a common benchmark is aiming for at least 6-8% cash-on-cash return based on your total investment (purchase price + rehab + closing costs).
Always factor in appreciation potential, tax benefits, and personal risk tolerance. In high-appreciation markets (e.g., CA), lower cash flow may be acceptable. In stable cash-flow markets (e.g., Midwest), aim higher.

Is it a paid off $100k home or $5M home? 

You can’t ask for a good cashflow amount, only a cashflow rate of return. 

And that number depends on you, your market, your property and your goals. If your market won’t appreciate you obviously need way more than the 5% you can get in the bank with no risk. If it’s a 1910 mansion you obviously need a boatload more to pay for maintenance/repairs than a 2025 condo. But if your goal is to earn tax deferred income and appreciation you can pass to your heirs tax free you can accept less. 

Tough to answer due to so many feelings about risk tolerances and what other investments could be making you as a ROI.

I feel leverage of real estate is the real strength of this asset.  Paying cash is safe and admirable, but it totally takes away this strongest tool of real estate investing.

If I asked you if you could figure out a way to earn a higher rate of return than 7%, then you should be pulling equity out and rolling it into another.

None.  The first mistake is the property is free and clear.  
If you achieved this by paying all cash, then you are losing money.  The CF is only playing catchup to the cost to you of the property.  If you paid all cash, you paid full price for the property, and the cash flow, any amount of cash flow, is only playing catchup.

Marcos - I agree with Greg's comments ("Gregs" think alike :) that cap rate is not relevant for a duplex. Everyone's investment criteria varies and sometimes it varies by location and type of property. For a residential (1-4 unit) deal, a "buy and hold" duplex for me (without driving value via renovations/BRRRR'ing) would be CoC between 8-12% and/or about $250 per door. For a duplex that you're renovating and potentially BRRRR'ing I would look to target to get 80%+ of my cash back on the refinance and then cash flow a bit less - maybe $100-$150 per door. Once again, if you ask 10 people for their investing criteria you'll get 10 answers, but over time you'll develop your own criteria based on what's a good deal for you in your particular market. Good Luck!