I look to be cash-flow positive with 25% down and want to see a return on invested capital of about 3% minimum.
So here's what I'm looking for:
Interest rate: 6.375%
Monthly rent: $1800
Taxes: 1.25% (no mello-roos is key)
Managment Fee: $100/mth
Repairs: 3% of rent
Effective Gross Rent: $19,872
NOI before financing costs: $14,527
Cash Flow Before Taxes: $3,061
Cash Flow after Taxes & Prin. Pmts: $1,579
% RETURN ON INITIAL EQUITY: 3.0%
Oh and I also want the schools to be good, so I know people moving there are interested in schools, and hopefully a higher quality tenant.
I expect to buying on this new criteria soon, in SoCal. If you want to know where, give me a call.
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