Currently in negotiations on a 2 bed, 2.5 bath townhome as a rental. This would be my #4. It's a JV with my biz partner (my mom). We both have experience working in the real estate industry, and make great business partners so no issues with the family dynamic there. I manage everything (and I enjoy it).
It's an off market property, so I have the chance to snag it before it hits the MLS. Turn key and move in ready. Located about 20 minutes from the closest downtown (Durham), but in a very bustling area.
The Stats:
Total cost: $110,000 ($108,000 purchase + $2,000 CC and prepaids)
Rent: $1100/mo, $13200 annual
Taxes: $1500
HOA dues: $1488
Maintenance/Repairs: $1000 (projected, likely less)
Insurance: $500 (projected, likely less)
Vacancy: $1320 (10%)
This gives a cap of ~7%. Cash purchase.
Normally I look for much higher numbers - my others are at about 12-13% cap minimum. But the market here is crazy. Honestly I'm not all that crazy about buying now and could wait until the next downturn... but who knows when that will be? Could be a few years, and sitting on the cash in the meantime isn't very appealing.
On the other hand, since that money isn't needed we could take a chance and invest it in something like a startup. I'm networked in and I don't mean a tech startup at an insane valuation... I mean a new business in an industry that I have expertise in (yes I have one in mind, founder is in college and has already had a successful exit).
Anyway, this is more of a question of the market(s) and the portfolio as a whole... everything seems overvalued now and those 12-13% properties are nowhere to be found anymore.
