Out of State investment & expected CoC

[Bhavin Patel]

Would you buy your first out of state investment if it's barely doing 4% CoC on the initial investment especially Memphis area?

[Jared Smith]

@Bhavin Patel I have the benefit of being familiar with the model you are looking at and the model that @Jordan Ray is referring to. You two have completely different goals and passivity requirements. How do I know, I recently set Jordan up with a home that he is renovating to create a long term rental, but he and his team are doing all of the work and will have to find the residents and they happen to live right here in Memphis where they are doing the work where he lives and works in real estate full time. 

The moral of this story is that you have to be careful when comparing deals and % returns because most everyone has different metrics and evaluation criteria. If you were an active investor and shooting for 4% CoC return that would be nuts. But this is also dependent on how much month you put down and various other things. Are you considering the equity pay down that your resident will be providing for you which goes directly toward to your net worth, not your bank account.

The question is one aspect, who and how they answer is what you need to be weary of.