How high is your ROI on your rentals?

[Matthew B.]

Just wondering what everyone shoots for as far as ROI or cash flow on their rental properties, with and without financing.

My target properties are 2-3 bedroom SFRs in Central Florida. They're $40,000-$80,000 homes and normally rent anywhere from $650-$900 per month depending on size and location.

[Matthew B.]

Here's an example of a deal I'm working on now:

REO 3/2 that needs a lot of work.
$36,000 purchase price
$17,500 in rehab
$1,000 property tax per year
$1,000 insurance per year
$1,000 maintenance per year
(These are rough estimates)
$800 per month rent
$9,600 gross rent per year
$6,600 net rent

$6,600/$53,500 = 12.3%

We've found that the difference in rent between our homes and the more expensive homes is not justified by the higher rent. So we stick to the cheaper properties. They're by no means the slums, just clean, affordable housing!