Analyzing a good rental

[Sean Parno]

Hello all

Last night I was in a Webinar with @David Greene and we went over the Rental Calculator to analyze good properties. I understand how to use the calculator but every house I had saved on Zillow that I plugged in (price ranging 180K-230k) wasn't giving a good cash flow and COC ROI.

What is the average for Cash flow and COC ROI % you guys look for? I live in Philadelphia so I know this market fluctuates between "sections of the city but I am just trying to sharpen my Analyzing skills.

Any feedback is helpful!

Sean 

[Katie Phillips]

@Sean Parno I am in Sacramento, Ca, so I understand your frustration. Cash flowing properties can be hard to find here as well. Some investors require at least an 8-12% ROI, while others are willing to take negative monthly cash flow for the appreciation. If you are a buy and hold investor looking for appreciation, negative cash flow is not ideal, but doable. Do not consider negative cash flow unless you are financially able to handle the payment. In my opinion, I would never consider property where the negative cash flow is greater than the principal payment on your loan. Your principal payment acts almost like a savings account for yourself. So, even if your property never appreciates, you are still building equity. I know this isn't a straightforward answer, but it's really up to you and your strategy.