What ROI do Buyers Want on Buy and Hold Rentals

[Ashley Johnson]

Hi BP family,

I'm getting properties both on and off market, and many of them rentals. I know how to calculate for flips, but what ROI do buyers look for on buy and holds rentals? What cap rate, C.O.C., etc? When calculating your offers, do you include margins for a rehab?

I want to provide more accurate numbers because I know the market is shifting from flips to more buy and holds.

Thanks all!

[Michael Dumler]

@Ashley Johnson, an investor's ROI and CoC of an asset is going to be entirely dependent on their risk tolerance and investment goals. However, you generally hear that 8-12% ROI is standard. You'll quickly come to find that most on-market properties will not meet investors' criteria. Knowing this, I'd focus your attention mainly on off-market properties. The more accurate and thorough you are with your numbers, the more confident you'll be when underwriting the deal and presenting it to investors. Furthermore, I would recommend using the BP calculators when analyzing a potential deal. I'm assuming you're wholesaling?