2.75% COC ROI - Is this deal worth it? 315K SFR (New Built)

[Varun Parkash]

Guys, i have been actively hunting down for a SFR property and came up with following analysis after doing BB Rental Property Calculator on a brand new SFR:

COC ROI = 2.78% when i have estimated:

1% Capex, 1% repair, 1% management (which means self-manage)

As per knowledge gathered on BP podcasts, it is advised to go for 12% COC ROI, in today's market, i could have gone in with 7-8%, but these numbers are looking bad.

This leaves me counting on appreciation alone. Is it better to research REIT's or look/wait for another deal, as market continues to remain on the high and this area appreciated 5-6% already in last 9-12 months. Also, speculations remain that market will crash after 3 years by 2021 (been hearing this saga since 2015 and we have been running in a record bull run ever since 2012)

[Jay Hinrichs]

bp is not the greatest place to get advice for low return rentals..

in non appreciating markets there is not reason to buy unless there is substantial cash flow

in markets that have a history or a good chance of going up .. 3% with appreciation and mortgage paydown is not bad at all.. especially when you don't have to put up with tenant BS you do in lower end rental markets.