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re: Rental Property Investment
Posted on 7/16/15 at 1:21 pm to SomeGuyFromLA
Posted on 7/16/15 at 1:21 pm to SomeGuyFromLA
quote:
I'd appreciate any insight you can provide
I base almost everything off of the cashflows. I won't do one that has negative cashflow...unless I'm absolutely convinced it's a distressed purchase with significant appreciation potential.
I assume:
- the low end of expected rent and with no rental growth over time
- the high end of expected vacancy (e.g. 1.5 months/year)
- the high end of maintenance (at least 1% of property value per year)
-the high end of required cap ex upon exit
- paying a full boat of property management expenses (8% of gross rents)
- a full boat of real estate agency fees upon exit
IF after going through all of that I find that my realized cash yield is at least 8%, then I look to proceed with the purchase.
I find that with markets as recovered as they have been since the crisis, it's hard to find houses that meet these parameters any longer.
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