Long term rental investment minimum return requirements?

[Spencer Gibson]

So in the past, I have mostly been involved in the flip game. But it's been a while since I have even done that as my market specifically has been pretty saturated with investors the last few years making the juice not worth the squeeze for some time now. But I have started to see a slight decline in investor activity in my area for obvious reasons and I think that trend will continue as people get more scared. Personally, I have been waiting for a long time for this and am currently ramping up marketing again to hopefully be in a good spot to take down some deals.

I anticipate doing a little bit of everything but would really like to start building up my rental portfolio. Because I live in a popular market I still don't see deep discounts on the horizon anytime soon so I am currently trying to figure out what my bare minimum requirements are for a long-term hold. I would love to get some opinions on this topic for what your minimum is before buying a long-term rental? 

I have always tried to  invest based on actual cash flow but any reasonable amount of cash flow is getting much tougher to achieve these days. Of course, once you factor in tax savings and equity potential, especially in a solid market it's tough to ignore the potential even if the initial margins are slim. 

Just interested in hearing what your thought processes are for acquiring long-term rental properties when there is very little cash flow. I feel like If I try to chase what is considered reasonable RV ratios then I'll never buy anything...

Thoughts and opinions are welcomed. TIA!!

[Drew Sygit]

@Spencer Gibson at least 80% of "real estate investors" are really hobbyists.

Why?

They're buying SFR properties at retail prices!

We did that on the first property we bought, then never again.

As an investor you should be patient and look for deals that meet one of the following:

1) You buy below market value
2) You buy with little to nothing down
3) You buy with seller financing

This past December, we bought a package of 4 properties that met ALL 3 of these!

You also have to make sure you have a clear vision of how an acquisition will make you money, and have as many exit strategies as possible.

80%+ of investors hire a Realtor to find them a property. That Realtor solely looks on the MLS.

We've only done one transaction via the MLS (out of 20+) in the last 10 years. Even on that one we got seller financing and low down payment, something our agent was shocked was accepted.