Preferred Investing Strategies

[Zachary Smith]

What metrics do you like most and make you feel most comfortable in investing? For instance cap rate, IRR? Cash on cash? The velocity of money.

[Corby Goade]

There is so much confusion on these boards regarding metrics- cap rates are only for commercial properties, five units or more. If you use a cap rate on a residential property, you will have a false sense of the actual value of the property and what you can do to influence that. 

As for what metrics to use? Totally depends on your market, your financial resources and your risk tolerance. My advice is to only go in to deals that will do at least two things for you:

-Start with 25% equity either through getting yourself a killer deal or by forcing equity through rehab (or a combo of the two)

-It will be cash flow positive.

If a property does those two things, you will have at least two completely viable exit strategies, which will significantly lower your risk. 

Good luck out there!