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Updated over 10 years ago on . Most recent reply

Less than ideal cap rate
I have two questions. My first question relates to a single family unit that I bought last year to reside in but have just converted to a rental. After research and plugging in all the numbers I have found that this property,( priced for 152000, closed at 168000 with additional improvement from the builder - projected gross rent of between 1295-1400) has a less than ideal cap rate. I don't know if it would be more prudent to hold onto the property and take it as a lesson learned or to liquidate if I can make a small profit off the house.
My second question - how many of you have incorporated your real estate holdings into an LLC to redirect liability away from you, the owner? If so is it worth the additional costs involved?
Most Popular Reply

Welcome to BP.
Cap rates are strictly market driven. There is no 1 "good cap rate". Most investors are happy with a range of 8% - 12% cap rate.
I have a series LLC therefore I could add properties anytime without forming a separate LLC. In my opinion, If you are shooting for LLC, go with series LLC.
Hope it helps.