What is a Good ROI to Look for When Investing in Rental Properties? [#AskBP 024]

10%? 15%? 20%? We can talk about finding good deals all day long, but what does that even mean? That’s the question Brandon dives into today on this episode of the #AskBP Podcast! You’ll learn how to calculate ROI and why a simple “cash on cash” ROI might not be enough to give you an answer. Stay tuned! biggerpockets.com/askbp023

Comments

1. is 17-18% good cap?
2. I've been very fortunate with my 2 residential properties. Bought 1 in 2012 (which I think was at the bottom of the market) as a potential retirement home for us for the future. We decided to rent it out until we're ready to move in. Obviously, price and location are important in your decision. We decided to hire a property manager to handle any tenant problems, collect rent for us etc. A property manager is an additional monthly cost but in my view well worth it. They will vet the tenants (back ground checks, verify employment etc and take care of issues like a leaking toilet etc). After ALL monthly debt (expenses) is paid, which includes mortgage payment , taxes, HOA fees, insurance, property manager fee, etc., our ROI (return on investment) is a tad OVER 30% which I think is amazing. This is NOT counting tax benefits or appreciation! Within 1 year of the first purchase, we decided to take a "risk" and purchase another residential property since the 1st purchase was doing so well. That one too is exceeding 30% after all expenses. Residential real estate is a tangible asset just like precious metals but that is a subject for another day. Having 20% to put down on your real estate purchase will prevent you from having to purchase PMI (Private Mortgage Insurance) which will save you $$$$. Market investments aren't tangible. All you have is "paper" (stock). Even if the real estate market takes a dive, people will always need a place to live. This is my personal story and I hope it helps in some way.
3. Thanks, Brandon. Great info as always. How do you choose areas that will likely have appreciation? I'm looking in a growing city but this area has 'happened' yet. Areas around it have been soaring though.
4. This is good, but mine is simpler: How much cash flow do you get? If its $350 a month in cash flow, I'll get out bed, but $400 + a month is my standard. You only get that in certain markets, though, so you have to learn how to look.
5. I like the Abbv. IDEAL
   I -Income
   D- Deppreciaton (Tax Benefit)
   E- Equity
   A- Appreciation
   L- Leverage
6. yo
7. Thanks for sharing this. I've been a landlord/real estate investor for over a decade, and I appreciate a video like this
8. Great Information from "one" of the best.