Buy and Hold Rules - Lets create a Summary

[Account Closed]

I'm trying to create a buy and hold summary to distribute to partners, i.e. Realtors. What do you thinking of the following:

[b]Goal:

Increase portfolio of single family residences to provide additional passive income. The overall goal is to increase portfolio to the point of providing a $X gross income per month

[/b]Focus:

1. Properties must provide positive cash flow. I’m following a rule that states that the monthly rental income has to be, or greater, than 2% of the property cost.
2. Ideally looking for properties where costs are less than 50% of income.
3. Owner financing where possible, due to Fannie Mae restrictions.
4. Leverage property management due to physical location of investment properties. ( Ie. out of state)
5. The main focus is positive cash flow but I’m rejecting areas with stagnant or depreciating property values.
6. Purchase undervalued properties to gain instance increase in LTV after renovation.

[b]Avoidance:

1. “C” class areas, ideally looking for “nice neighborhoods” or up and coming.
2. Older properties due to excessive maintenance costs.
3. Multi family, condos or anything with an HOA.
4. Areas where vacancy rates are greater than 10% per annum
5. None of the following in close proximity:
a. Rail Roads
b. Busy Streets/Highways
c. Flood Plains
6. Rapidly decreasing populations, i.e Cincinnati.

[Bill Gulley]

That's much better! Okay, but I then think you have defined things too narrowly. The broader scope you provide for Realtors the more they can show you and begin limiting proposals more with comments to them than a written statement. If they see that you have restricted most properties, they won't look.

If you look at large investment companies they say they are seeking properties with aggressive capitalization rates for long term investments. That's pretty broad if they get something they don't like they tell the agent, we'll pass on this one but would be interested in working with you in the future.....blah, blah...

I think you're better off being known to "bring all offers" and you decide instead of say "bring just these".

Just saying...keep the door open