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Updated over 5 years ago on . Most recent reply

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133
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Vince Lucas
  • Flipper/Rehabber
  • Cleveland, OH
69
Votes |
133
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What does a perfect SFR rental look like????

Vince Lucas
  • Flipper/Rehabber
  • Cleveland, OH
Posted

I am having a hard time figuring out what an “ideal” rental property looks like. Does it need to cash flow a certain amount? Do I measure it by the cap rate? Cash on cash? A certain amount of equity in property? Would like to hear examples of others ideal rentals that they have purchased.

  • Vince Lucas
  • Most Popular Reply

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    Jim K.#3 Investor Mindset Contributor
    • Handyman
    • Pittsburgh, PA
    13,749
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    Jim K.#3 Investor Mindset Contributor
    • Handyman
    • Pittsburgh, PA
    Replied

    Grumble, grumble, grumble.

    This thread, once again, illustrates how much the reality of making money in SFR is often divorced from theories about it on this website.

    The OP (who identifies himself as a realtor, appraiser, and investor) asks in the title, "What does a perfect SFR rental look like?"

    This is what I started thinking of immediately:

    1. Poured or block foundation, no major cracks or visible settling.

    2. 2 bedrooms, 1 bath, +/- 1000 ft2, single soil stack construction.

    3. Simple roof shape, conventional roof slope.

    4. No large trees, no major rise in the possible path of the sewer line to the street.

    5. Modern gutters.

    6. Relatively flat lawn.

    7. Brick veneer.

    8. Up-to-date wiring.

    9. Copper or PEX water supply.

    10. ABS or PVC DWW.

    11. Up-to-date windows.

    12. Short chimney on roof peak.

    13. Safe neighborhood with good lighting, high local participation in neighborhood watch program.

    14. Easy drive to supermarkets, shopping centers, major traffic arteries, local job centers; access to public transportation.

    Those are a few visible characteristics I look for when buying or remodeling single-family properties as rentals. They partially answer the question of what the thing would look like. Those characteristics help make me money. Conversely, the lack of those characteristics costs me money.

    It's clear, though, for the OP, the phrase "looks like" is just a figure of speech here. He's interested in cash flow, cap rate, and equity in this question. What the thing actually looks like...that doesn't matter so much.

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