Buy and holders. How do you deal with the 1% or 2% rule

[Kent Nielson]

I'm curious how you deal with the 1-2% rule. Do you lower the percentage to make a deal work or do you just end up putting more down? Or just find extremely good deals?? Or just not buy and hold lol.

Also on new construction would it be safe to lower your estimate for repairs and especially cap ex, since everything is brand new?

[Chris Shepard]

Hi,

In Portland we look for something around the .75% to .8% rule and only use that with minimum of 75% LTV. Ideally we like to get 100% of our cash out by doing a value add project and refinancing the property.

We recently bought a 4 plex in Lake Oswego for ~$800k and immediately raised rents to $6400/m.  

That one was a decent deal.  If you find something around the .75% and the property has normal expenses, then you found yourself a good deal. 

Fir single family homes it’s much much harder.  We don’t really look at those for buy and hold assets, really only value add.