Rental Income ROI

[Lana Chen]

Hi- 

I'm completely new to the real estate investment world, and would graciously appreciation any guidance and advices from the gurus on this platform.

I'm currently a resident in NYC. Because property here is just too expensive for me, I'm considering purchasing rental investment properties in Houston, TX. I've done some macro research on my own about the city, and find it appealing that the economy has been flourishing there and properties are relatively at my ideal price point. 

I've recently made one trip there to scope out the areas, and browsed through some properties. My target ROI after monthly expenses is 8-10% a year over the total purchase price. I'm having a dilemma between areas after speaking to some brokers and residents in the city. First, I like the areas such as the Medical Center where professionals and Universities are around (where potential appreciation might occur) or second, I'm debating upon maybe the more unfavorable areas where cash flow is higher but the neighborhoods aren't the greatest.

The properties I'm seeing for yearly ROI ranges from 5-7%... which doesn't meet my expectations of 8-10%. Now my question is, what is a good benchmark ROI for rental properties? 

Like most, I hope to be financially free in the future, owning multiple rental properties.

And if anyone have any insights about Houston, I'd greatly appreciate it if you can share your wealth of knowledge with me.

Thanks,
Lana

[Jimmy H.]

@Lana Chen  Do you plan to have a property management company help manage the rentals since you'll be an absentee owner?  Make sure you factor that cost into the calcs as well unless you plan to manage it long distance yourself.  Welcome to BP; there's opportunities in Houston but one needs to weed out the duds as well.