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All Forum Posts by: Ryan Webber

Ryan Webber has started 13 posts and replied 1913 times.

Post: Need some quick advice please

Ryan WebberPosted
  • Wholesaler
  • Amarillo, TX
  • Posts 1,981
  • Votes 659

Okay, I am in a very good rental (low appreciating) area, and I understand that most of the country is not. I say that to preface my rental numbers.

I look for a minimum of 40% ROI for whatever I am out of pocket at closing. Now let me say this also. My numbers are conservative even for my market. I feel if I am going to invest my money and my time into a deal I want to make the best money at it that I can.

Post: positive cash flow?

Ryan WebberPosted
  • Wholesaler
  • Amarillo, TX
  • Posts 1,981
  • Votes 659

WOW. Not only will you not be cash flowing you won't even cover an interest only loan at 8%. RUN!!!!

Well let me clarify. If your startegy is to buy and hold for rental income then RUN!!! If your strategy is to buy and refi or resell with apprecitation then maybe stay. Your market needs to be a HIGHLY appreciating market to rationalize a negative cash flow like that.

Post: Rule of 100, 1% Rule, or whatever it is called

Ryan WebberPosted
  • Wholesaler
  • Amarillo, TX
  • Posts 1,981
  • Votes 659

"Magic Rental Formulas" are common with investors for sifting through the hay stack to find the needle, but an experienced investor is still going to crunch an actual income expense statement on the property before they put it under contract.

Now the 1% rule of thumb completely depends on your market. In my market my number is 2% or a monthly gross rent multiplier (GRM) of 50. A monthly gross rent multiplier allows easy computation of general price from rents. Rents minus utilities multiplied by 50 should be my highest purchase price. A 1% or 100 monthly gross rent multiplier are a dime a dozen in my market. When you crunch an income/expense statement, including maintenance and vacancy, you most likely won't even be cash flowing (depending on insurance and taxes) on a 100 monthly GRM. If I remember correctly I think a 90 monthly gross rent multiplier (7.5 annual GRM) is the highest you can realistically go to cash flow.

Realtors are NOT investors. Be careful when you are trusting a non-investor with investment advice. Determine your magic numbers on your own and then take them to a realtor. Unless you are in a HIGH appreciating area then a non-cash flowing property is not a good investment startegy.