Analysis Paralysis on Buy & Holds...What is a good deal?

[Brian Huber]

Hi, I've read a ton on this site about buy and holds and how you can't just rely on the numbers or the 2% rule and so on.

At this point, I have analysis paralysis on this subject. Just what is a good deal?

I've heard:

-$30K homes are bad because of depreciation and low quality tenants

-Media price homes have better tenants but because of the price, cashflow could be thinner

I'm at a loss on how to recognize a good buy and hold deal.

Can you perhaps share an example of a buy and hold you have that's a good deal? As far as grade neighborhood, cap rate, cashflow etc.?

Any help would be great. Thanks!

[Zach Adams]

Originally posted by @Brian Huber:

Hi, I've read a ton on this site about buy and holds and how you can't just rely on the numbers or the 2% rule and so on.

At this point, I have analysis paralysis on this subject. Just what is a good deal?

I've heard:

-$30K homes are bad because of depreciation and low quality tenants

-Media price homes have better tenants but because of the price, cashflow could be thinner

I'm at a loss on how to recognize a good buy and hold deal.

Can you perhaps share an example of a buy and hold you have that's a good deal? As far as grade neighborhood, cap rate, cashflow etc.?

Any help would be great. Thanks!

 I don't see the 2% or even 1% rule in the area I invest very much (north Atlanta).  But it all depends on your goals.  What kind of cash flow are you looking for each month? How many properties do you aspire to hold?  Long-term plan?

At this early point of my RE investing career, I gravitate towards what I know, and that's single family homes in the $120-150k renting for $1100-1300/mon. Maybe one day I'll get into distressed properties and hope to learn more as I go. I use a PM and am not involved with tenants, screening, etc. Very hands off as I have a 9-5. I'm comfortable with $250-400/month/door. Cap Rates are just below 7%. Some people won't touch CAP rates this low, but for me, that's what I see in the area that I know and understand.

What's the long-term growth of the city and neighborhoods? Are there people and corporations moving there?  I'm not suggesting a socio-economic dissertation, but just some broad understanding of the area.

Also, use greatschools.org to see what schools are in the area.  Very important.  

Hope this helps -

Zach