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Started by jimmoney, September 18, 2018, 04:28:37 PM
Quote from: Money Ronin on October 01, 2018, 06:48:03 PMI have owned both single family homes and apartments as investment properties. Currently the majority of my real estate is in apartments. Here are some of my criteria for real estate investments:1. Good bones (e.g., no detrimental features that can't be fixed such as insufficient parking)2. Infill (i.e., more homes can't easily be built nearby)3. Desirable location (e.g., people want to live there due to jobs, schools, trendy restaurants, etc.)4. Cash flow (whether you buy for appreciation or not, you must cash flow)5. Leverage (any property can cash flow, I hope, when paid with 100% cash. I want to cash flow with a down payment of 25% to 35%).If you already own two other condos in Florida, you should have a better sense of actual maintenance costs. Maintenance and vacancies are going to kill any returns you project, especially if your returns are mostly predicated on cash flow. In my market and buildings, my cash flow is almost zero because I invest a lot in maintenance and upgrades. But I can get buy even if 25% of my portfolio is vacant for a few months because I've built that margin of error into my projections before I bought.I have a lot of planned turnover as I "upgrade" the tenant base. I make very little money on cash flow, but I've done very well on appreciation due to leverage. I also make some money as my tenants pay down my mortgage. In order of impact to buy bottom line, it's:1. Appreciation2. Tax benefits3. Principle pay down4. Net cash flow (hopefully this will increase over time)It sounds like you are in a market where appreciation is limited. In that case, your cash return needs to be stellar. 8.5% (likely less) is not a good enough return to motivate me to invest given the hassles of real estate. I would look to other markets and crowdfunding. Personally, I'm hanging on to a bit of cash for the next opportunity.