How do you answer this question?

[Michael Blackwood]

I get this question when speaking to a wholesaler or realtor for the first time.  "What kind of return are you looking for?"  

This seems like a vague question but they seem to be wanting a specific number.  For you experienced investors how do you answer this question?  And what metric are they usually referring to.  (There is cash on cash, cap rate, etc... ).  

For me, and maybe this is because I don't have a ton of experience, I have to just look at everything when I evaluate a property. How much capital will I lose in the deal, if any? Where is the home located? Is the home in a good area primed for appreciation with low crime, in that case I'd settle for less COC return. If it is in a sketchy area but cash flowing a lot the numbers might be different. It would depend on everything, not just a single number.

Any insight would be appreciated.

Thanks

[Alexander Felice]

I've never had someone ask me this. I agree with your assessment that it's limiting, and frustrating. 

Knowing your investment criteria is a GOOD thing to know, knowing exactly what return you want is going to get you distorted lists. What if you say you want a 10% return, well you're going to get back a lot of dumpy places with high returns and miss out on a lot of great properties that only get back 9%

and we are only talking about seller pro forma calculations, so you're going to miss out on a lot of potential deals because of the over reliance on a single metric

instead, how about you say "I wanted to see all 3/2 SFR between 50-105K selling price in these zip codes" and maybe address some locations you don't want to buy in.

describe your investment criteria by the asset you want to purchase not by final ROI. If you go by financial metrics you're essentially filtering what you see by someone elses underwriting while disregarding the property itself.