optimal rent per dollar invested

[aggiecrew]

hi,

what kind of rental properties give you the best yield in rent per dollar invested in buying the property to rent out? does this come from cheap 1 bedroom condos or maybe from 100K family houses or maybe some other kind of property? does the price area make a difference in addition to the kind of property for what I'm asking about?


thanks!

[aak5454]

multi-unit properties in the worst neighborhoods have the best gross rent multiplers.  Most people don't like them becuase they are not "sexy" and a pain to deal with.  There is a reason the word "slumlord" has the connotation of well-off owners of crappy property.

[aggiecrew]

thanks for the reply.

does anyone have any examples of how much money they've paid for these types of properties and what they were getting in rent?

thanks!

[REICleve]

Hey aggie,

I have a friend that's into rentals and his maximum offer is 80 times gross monthly rent minus any repairs/updates.

Example: 5 unit building @ $500/month rent = $2500/month gross rent * 80 = $200,000 - $37,000 in repairs = $163,000 maximum offer. You don't necessarily want to offer that much, but that would be the maximum.

Basically, after vacancy loss, property taxes, insurance and maintenance, it leaves a ROI of 10-12% excluding appreciation

Hope this helps,
Rich

[focusagent]

There are a lot of aspects and numbers to consider and they vary widely from property to property.  It's best to get all the figures and analyze the deal on a case by case basis.  Punch in the numbers and make sure the cap rate, GRM, DCR, CashFlow and ROI all meet your expectations.

[aggiecrew]

I was just wondering if there was a particular subset of rental investing that people found were most likely to give the highest yield per dollar invested. like, would it be lower-middle class simple family houses, 1-bedroom condos, vacation properties, section 8 housing, luxury urban sky-rise condos, low-income houses, middle to upper middle class houses, duplexes, multiplexes, large houses, etc.

so please, if anyone has experience and examples, please chime in!

thanks!