What I look for in Investment Properties
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: Cost $212,000 downpayment 25% Interest rate: 6.375% Monthly rent: $1800 Vacancy: 8% Taxes: 1.25% (no mello-roos is key) Managment Fee: $100/mth Repairs: 3% of rent Insurance: $900/mth Result: 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.