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Updated over 4 years ago, 06/21/2020
Which is more important, high ROI or bail with no loss
I'm a total newbie here and I've been practicing crunching numbers to decide if a unit is worth it or not. I'm kinda stuck on which is most important to make my decisions on buying or not buying, good ROI or selling without a loss if things go bad? So here's my example below:
Asking price is $44k, being all in at 75% is 39k after rehab. Similar Comps in the area are going for 52k ARV. We settle for 38K minus rehab cost.
Unit rents for $800 p/m
Down payment is $7,600.00, was off on numbers and ended up spending 10k in rehab, so my TI is $17,600.
After expenses cash flow is $231 a month. My ROI is 16%. So in roughly 6 years I'll make my full investment back.
Things go bad and I have to bail after 3 years and the most I can get ARV is 52K. I'm still invested 9k plus let's say 27K still owed on the loan on the unit.
Which is more important, a high ROI or being able to bail out with little to no loss if things go south?