What is a “good” ratio when buying a turnkey rental privately?

[Thomas W.]

I’m looking at purchasing my first turnkey rental property and I’m curious to hear from the community. If you’re buying from a private lender, what do you consider a profitable rent ratio to pay for the home? Example: The seller has a SFH that historically rents for $1000/month and he’s looking to sell the property for $100,000. That’s a 1% rent ratio.

[Jeff Schechter]

I agree with @Ryan Blake. Each deal must stand on it's own merit. Here in Indianapolis, we first analyze any deal by it's Cash-on-Cash ROI. Obviously, that position will improve after getting financing (or refinancing), but that is our BASELINE. We look at insurance, taxes, future maintenance, property mgmt fees, etc. If it's not going to generate at least 10% C-on-C ROI at first look, then we usually pass on the deal.