All Forum Posts by: Peter Jin

I think it depends on your strategy. If this is a buy-and-hold, I would consider anything over 10% to be good. If this is more active and a fix/flip, I would look for over 20%. Also, compare it to other returns you can get in the market. How passive and how safe these other options are, are also important factors to take into consideration.

My 2 cents. 

• Cash flow is the safety net that shields your investment from the necessity of a rushed sale, while appreciation leads to wealth accumulation. As rental rates progressively outpace expenses over time, the growth in cash flow can provide a reliable income stream.

In line with my investment approach, I focus on these three key metrics when conducting property analyses:

1. Initial Equity at the End of Year One: This equity can result from either a down payment or improvements made during a rehab phase. A minimum of 20% equity is my benchmark, ensuring I dont find myself upsupside down on my investment.
2. Positive Cash Flow by the Conclusion of Year One: I aim for a positive cash flow figure at the end of the first year. As mentioned this means the property can support itself and wont put me in a situation where I can cover debt, operating expenses or capital expenses.
3. Annualized Return if Sold at the Five-Year Mark: This metric offers a comprehensive view of investment performance, blending both cash flow and equity. If I NEED to sell within five years, this calculation provides insight into the real-world return that incorporates these vital aspects of the investment.

I want a balance between steady cash flow and long-term appreciation potential.