Final Interview Case Study

[Ryan Law]

Hey Everyone! I've got a final interview this Thursday, and it seems pretty straightforward. "analyze these 3 SFR's as potential investments". I've done the numbers, accounted for mgmt fees, vacancy rates, etc. Pretty easy math without a loan. The only thing that's tripping me up is the "1yr hold period". With a one year hold, assuming 2% closing costs on the front, and 7% sale costs on the back.. it seems like these would all be bad investments..all the numbers come out to have negative IRR's, cash-on-cash return only 4-5%. It seems like 99% of SFR's would be bad investments on a 1yr hold.. but that seems too simple, and it feels like I'm missing something. Any thoughts? The only thing I could think of that could give any glimpse of a good investment on a 1yr hold is that the back-end value would be different since you've placed a tenant and the property is cash-flowing. But, I'm pretty green to this! Thanks in advance for any expertise!