Deal analysis question

[Blair Boan]

Just signed on as a PRO member and well worth it. I️ am currently working on my first fix and flip home but really just dove in and didn’t really run rental numbers because it was such a discount buy, I️ had to act fast. But with that said, I️ am now diligently looking for my first buy and hold rental. My end goal is to acquire as many properties as possible for long term passive income. But my question as the title suggests is about analyzing a deal. Brandon Turner says he personally never picks up a rental home that doesn’t have a cash on cash return of AT LEAST 12% after everything is accounted for (PITI, cap ex, vacancy, repairs, management, etc). But then he also says if he can cash flow $100-$200 per door, that is a winner as well. I️ am in Greenville, SC and have been calculating many many deals. Nothing seems to fit this mold. Sometimes the numbers work out that I️ could cash flow $150+ per month, but the cash on cash return in sub 7%. Other deals that fit the mold of the 1% model ($54,000 purchase price with a $550/mo rent) ends up only being a 4% cash on cash return, so then that doesn’t make sense to me. I’m curious what would be more important? A better return (because the point here is to get better returns than the stock market) or higher cash flow? I️ simply have not found a deal yet that hits the 12% cash on cash return. Most homes that can charge 1200+ costs about $215k But on the other end of the spectrum, homes that are more on the cheap side (50k, 60k, etc) only call for about $550/650/mo. and more repairs, etc. Follow up question while I’m here: When a whole year goes by and there have been no vacancies, what do you do with that built up reserve? Put towards the house? Pocket it? Keep it in case there is a long period or vacancy? The same goes with repair reserves. Thanks a lot.