A newbie asks, "What's your lowest accceptable ROI on a rental?

[Lynn DeShazo]

New to BiggerPockets posting (read the site a lot though) and new to real estate investing, in the Birmingham, AL area. Here's my first question for the BP reader forum:

My business partner and I are working on making our first buy of a town home rental property in the Helena-Pelham-Alabaster area of Alabama. We've run a handful of ROI calculations and are finding it challenging to find good properties that could give us an ROI of over 10%, taking the usual expenses into consideration. One source of "mentorship" says if you can't get at least 20%, then it is not worth your time. So in your experience (anyone?), what do you consider an acceptable ROI in your rental property business? Thanks for the input.

[Charlie Fitzgerald]

That ROI, which you as the investor, is willing to earn, given your own needs goals, dreams, desires and time horizon. I bought a house once for 68000. Rented it for $200 a month to a couple that could not afford more, but they took really good care of it. With taxes, insurance, sewer and garbage and a home warranty plan, I was negative about $125 a month. I sold the house 16 years later for $296,000. I think you see my point here...