Posted by JT-IN on November 03, 2009 at 11:06:45:
In Reply to: Where's the Money? posted by Dr. B. (OH) on November 03, 2009 at 08:06:14:
You've no doubt heard the saying; Figures lie and liars figure. And that has nothing to do with your question but we get all hung up on numbers and ratios, and so the question is, where did you come up with those suppositions...?
The 1% thing is an old standard, but usually applies to SFH's. However on SFH's you are NOT going to have a 50% expense ratio, at least you shouldn't have. So in SFH's, if you can get 1% rent... and that usually only works to a certain price point, like under 100K, and your expenses are say not more than .15 or .2%, then you can make a small monthly c/f and hopefully with less headache than a 3 or 4 unit bldg that is more mgmt intensive.
If you have a 4 plex with a 50% expense ratio then you simply need a greater than 1% c/f. OR, how about buying the unit for 50% of FMV, then get 1% c/f of FMV, so now you have 2% c/f...
Coming from mh's you will have difficulty making sense of the smaller returns on bricks and mortar, but what you don't have on the wobbly boxes is long term appreciation; (which in theory you will have with real property). The profit is all in how you buy the property. If you go in and pay too much (retail price) you will be sitting with a dog for many years in this mkt. Mh's are no different, really. You gotta buy em right and the numbers will take of themselves.
- Re: Skewed numbers Todd(AZ) 16:34:39 11/03/09 (0)