How Much Would You Pay for this Deal?

[Mike Neyman]

I have a property under contract that I plan to hold as a rental, but have started thinking about wholesaling it to another investor. I've never done that before so I'm curious to see what investors would pay based on the following information.

Type: single family, 3 bed, 2 bath
Condition: Not newly rehabbed, but more than sufficient for renting
Additional Repairs Needed: $0
Location: Suburb of Cleveland, OH - blue collar area, not a war zone.
Market Rent: $900
Property Taxes: $193/mo

I know that any savvy investor would have to confirm all this information, but lets just assume its all accurate.

How much would you pay for this house?

Would you prefer that it be vacant or already have a tenant and property manager in place?

[David Beard]

I agree with the posters who are indicating that a 30% grosss rent yield (ie.. "2.5% rule") for a SFR in Ohio that needs little or or no rehab, makes sense for most investors.

If you market it effectively and it's truly a decent area (must be to get $900 in rent), then you might be able to sell it as a 2% property (ie.. 12% cap). But in that instance I'd want to see that there is some fair volume of retail O/O sales activity in the area supporting the valuation as another exit option. (Not just a rental area with nothing but foreclosure sales, in other words.).

Good luck with it.