Many investment properties are priced just right. 10% CAP rates are not uncommon return.
Great properties, Great cash flow and even structured properly there are great tax benefits.
The other question is do you finance or pay cash?
Cash is always king, no matter what the interest rates are. Don’t have to apply or qualify and your privacy is protected.
However, with low interest rates, even commercial loans for investment properties, the leverage option is very good too.
Basic rule of thumb is the monthly rental income should be no less than 1% of the purchase price, including closing costs and fix up.
So if you are Charging $1,000 / month rent, then the maximum paid for the property is $100,000.
And no these properties are not dumps, but great properties.
Find the average monthly rental prices in your market, Craig’s List will do, and work off those rental rates to determine which homes, areas and prices you will pay.
Sticking with a the simple 1% rule and you will almost never get stuck in a UP or DOWN market.
Paying too much for properties and over leveraging can and often does lead to challenges.
Allen Tate Realty
Need Help locating great investment properties? Contact me and I will be glad to help.