Rental unit [SFH] quick n dirty comps, metrics, ratios? IRR? RoE?

[Jason Chan]

Hi - i'd be interested to hear what are the common/useful metrics to compare rental potential for SFHs...

I've seen the 1% of home value as a rule of thumb but what others would be considered useful? (don't think any opportunities around me easily meet this criteria...also, this wouldn't account for any potential increases in rent prices...) I could model out the cash flows (DCF style) and make assumptions for capex buffer (towards repairs, appliances, etc) spread evenly or could make assumptions based on individual properties and timing but didn't think that'd be the most efficient way to go about it..

what are y'all most interested in seeing? is it ROE, which would heavily depend on financing and capital structure? [feels right to me..] or do you look at it based on an ROA (evaluating the productivity of the unit/asset itself)? Or is it simply, IRR? The issue I have with IRR, is that i don't (yet) have an estimated time frame for exit and am not really looking to 'flip' things..

further, is there a simple way to compare varying conditions of unit? I presume that i just don't have enough experience evaluating how much floors, bathroom, hvac, etc, etc would cost in order to quickly buffer up the cost before doing this kind of analysis...

...or is this kinda top down analysis difficult for SFH given the nuances and specificity of each (i can see how this is easier for MFH, etc like how RE PE does it across large #'s of units...

and when I am 'conservative' in individually modelling out improvements, repairs, buffer, etc, my margin of error in that often is the entire expected 'margin'...does this just mean that the margins themselves are too tight? or how much additional room would you look for all in?

thanks!