Hello,
This is my first forum post. I live in Hayward WI. I'm a newer REI. I have spent last few months education myself via REI books, videos and podcast's, most of which is via this great community of BiggerPockets. My goal is wealth building via buy and hold strategies with SFH and MFH. My forum question is relating to the funnel process of "rule of thumb". I have started my analyzing and find that most of the properties pass the rule of thumbs if I use a purchase price reduced far enough below asking price. My next step would be to make offers on these properties. My question is do you suggest making offers on all analyzed property that fits into the "rule of thumb" regardless of how much of a discount (how much of a low ball offer) you are asking for?
For clarity this is my version (so far) of the "rules of thumb". Please feel free to help me make any needed corrections or changes to my analyzing values and checklist.
thank you,
Curt
| My Analyzing Values and Checklist | |
| Built | ? |
| Cost per SqFt | ? 50 |
| 2%/1% Rule | min 1% - prefer 2% |
| CAP Rate | min of 8% |
| Cash on Cash | min of 8% |
| Equity Appr% | 5% |
| Monthly $flow | $100 MFH - $300 SFH |
| Y1 Ttl Return | ? |
| Y5 Ttl Return | ? |
| Debt Service Coverate Ratio | 1.25% or higher |
| GRM | 4% - 10% |
| NIM | ? |
| amortization term | 20 preferred up to 30 |
| maintenance flat | 10% |
| vacancy rate flat | 6% |
| Capital exp - capex | 8% |
| repairs | 10% |
| 50% rule | 50% or less |
| 70% rule | 70% |
| exit strategies | |
| estimated hold time | |
value adds | |
