Deal Question and Cash-on-Cash Return

[Keith A.]

I've been coming up with a strategy for buying properties with a minimum of 15% ConC return. When looking at properties in the area and the amount they rent for they seem to hit the 20% ConC return easily. This is without any price negotiation and selecting properties with tenants already in place for actual rent numbers.

Are others seeing this type of return? I'm thinking I may be missing something so I thought to post one of the deals to get input on.

3bed 2bath
Asking Price: 65K
Gross Income: 14,220
Using 50% rule: 7,110 NOI
Debt Service: 3,140.40 assuming 30yr @5% with 25% down
Cash Flow: 3,969.60 at about 20% ConC return

Please let me know if this looks right and if 20% is a better goal in this current market. Could even be 25% with negotiation.

Thank you for your input!

[Jon Holdman]

Looks closer to 25% to me. Be sure there really is demand and that you don't have an issue with Chinese drywall. But based on the numbers it looks like an excellent deal.