Really stuck and frustrate with my analysis, could use advice...

[Brian H.]

Hey everyone,

So I am at a point where I am just really frustrated and honestly a bit burnt out.... and I don't even own a property yet!

So, here's my problem.

It seems like almost none of the homes I run analyses on will meet these suggest ROI's that I read about. 10%, 15% even! I rememeber more than one podcast where the guest mentions that they don't buy rental properties if they can't get upwards of 15% - 20% ROI on these properties. I have no idea where they are finding homes this cheap with rental markets that provide such high rental profits. Even getting upwards of 8% - 10% is seeming impossible...

Example:

There was a home for sale up here for $89,000. I spoke to two different people that work in the rental market up here and both recommended a rent of about $650/month for said property. With my calculations, that would have had a cashflow of -$26.72 and an ROI of -1.41%, That is with a traditional 30 Y mortgage and 20% down. Granted, I realize I could get it for less than the asking price of $89k but it still wouldn't bring in much of anything for me.

This is with 5% of the monthly rent for Vacancy and 5% for Repairs/Maintenance, 15% for CapEx, monthly property taxes (about $63), ~$50/month insurance.... and of course the mortgage payment.

There is a huge rental market up here and people seem to be doing well but I am trying to be cautious and take EVERYTHING into account, as I have learned from reading and then also being here on BiggerPockets.  How are all these other people making money on properties and I can't seem to find any that make any sense on paper?  

This isn't the only property, of course. I have analyzed maybe 30 properties since November... only a few would have worked, based on what I am calculating, but they were out of my price range.

Hope I can get some responses to maybe help me figure this out. It is really burning me out... :-/

Thank you in advance for any advice!