Chinese Investors Backing Latest Bulk Single-Family Rental Purchases

[David Krulac]

According to a report on Co-Star, Reven Housing REIT Inc. has bought 170 SFH in Houston area. see article here:

http://www.costar.com/News/Article/Capital-Markets-Chinese-Investors-Backing-Latest-Bulk-Single-Family-Rental-Purchases/153267

[Eric Tait]

It depends upon year built, condition and where the house is.

Many of the bread and butter rental homes are 3/2/2 and worth between 80-120K. So if you can get away with 10-15 K in rehab each, you will still have equity and those properties will give you a rental rate of $950-$1300 again depending upon on the area.

A simple rule of thumb that I use in Houston is:

at a $70,000 all in basis and a $1000 a month in rent you will usually get around a 12% unlevered cash yield. (assume around a $300 +/- a month in expenses for taxes, insurance, maintenance, vacancy)

You can then slide this based upon your cost basis, and rental rate of the area.

If you use leverage, then of course the returns just move higher.

This assumes that you have rehabbed the property replacing outdated systems (cuts on maintenance costs) and that you know how to manage it well on the marketing and tenant training side.