Reasonable IRR and other metrics on turnkey in 2021

[David Lutz]

The market has changed so much over the last 2 years, I'm finding that posts and other reference points on what's a good deal from a few years ago don't seem accurate anymore. I'm buying turnkey properties from out of state (buying them in California just doesn't work) for buy and hold. I understand that you can get much higher returns buying distressed properties, but that's not something I'm ready to attempt yet. So I have one house purchased and two under contract - with active contingencies so I can still get out :)

Assumptions: 25% to cover vacancy, R&M, CapEx. solid assumption for all the other variables. 20% down with 30 year note at 3.625%. 10 year holding period. B neighborhoods, SFR, IRR includes sale with 6% transactional cost and the annual CF from rent. Tax benefits excluded.

• Greensboro NC: Purchase 137.5K built 1963, Gross Yield 11.5%, "cap rate" 6.9%, CoC 6.5%, 10 year IRR 14.1%

• Martinez GA: Purchase 145K built 1970, Gross Yield 10%, "cap rate" 5.9%, CoC 2.7%, 10 year IRR 13%
  
  Grovetown GA: Purchase 159.7K built 1999 assumes lower maintenance, Gross Yield 9.7%, "cap rate" 6.3%, CoC 4.2%, IRR 14.5%

I should clarify that I don't care about CoC so don't light me up on that. I care about the overall return. Also, I've put in conservative appreciation assumptions in general for area's that have strong economic and population growth. So these deals are very likely to perform better than listed. Obviously I'm saying that because I spent a lot of time finding/negotiating these deals, and they're the best I could do in the current market. I'm just trying to figure out if the issue is that I just suck and didn't realize it, or if the market has really changed that much. One of my current contracts was off MLS and I negotiated the price down, the other had bids over asking but mine was a stronger offer (at asking).

Honestly I'm just second guessing myself a bit now. I know I'm getting some of the better deals available for turnkey in these markets. That doesn't mean they aren't the best of a lot of crap opportunity. At the end of the day I might have been better leaving my money in the Stock Market. Are you guys seeing better deals than this in good second tier markets? Is there something I'm missing? Why they hell are we buying SFR? Disclaimer - this has been bugging me for a bit and it's now 2am, normally I'm more optimistic.