Updated over 5 years ago on . Most recent reply
Newbie Here - Cleveland Ohio
My specific question is, when building my real estate road map, what numbers should i use for
Single Family Cash flow
Dulpex Cash Flow
Profit per house flip
My thoughts right now, which are at their infancy, is i would use a combination of rental properties as well as a flip or two per year, but i'd like to understand more of the numbers.
Any help would be awesome!
Steve
Most Popular Reply
@Steve Salzman in addition to the BP calculators, which are great, there was a webinar a few weeks ago about this exact topic. It was called "How to Evaluate and Offer on Rental Property" Brandon went through some examples and gave the metrics he uses as a benchmark for his investments. He suggested the following as rules of thumb:
- Multifamily $100/month/unit
- Single Family $200/month
- Cash on cash return 10-12% (annual cash flow/total cash invested)
- Equity of at least 25% (property value-debt)
- Total return over 5-10 years 15% (double the stock market) as measured by (total profit/total cash invested)/number of years
- 1 or 2% rule-- rental income generated/purchase price = at least 1% or 2%
Even if you know all these things, the webinar was a good refresher. Worth watching if you're able to find it in their library on here.
As for my clients here in Cleveland- do they follow these guidelines for all of their deals? No. Do my husband and I follow these exactly for our investments? Nope! As has been said, every investor has their own objectives for which one of these metrics might carry more weight than another. It depends on your risk tolerance, your long term plan, what kind of financing you're using, and so on. As you're starting out, make sure you find someone to work with who understands real estate from an investor's point of view. It will make a difference. Let me know if I can help! Happy to talk further.