Just 5-6 years ago rents of 1% of sale price was a decent metric for ROI. I haven't seen anything close to that in our market for the last several years. What's a good target in 2024 (as a rule of thumb, not absolute) according to the RE board these days?

1% of sale price if there's little appreciation.

Of course if you expect appreciation then you can accept lower rent/sales price.

Martin Q. Blank said:

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1% of sale price if there's little appreciation.

Of course if you expect appreciation then you can accept lower rent/sales price.

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I just haven't come across any deals where 1% is feasible in the last couple of years. Maybe a couple where sales price is deflated due to need of renovation, which impacts gross $ amount invested.

Most deals are closer to 0.5% rents/sales price.

I think the calculation is $100,000 unit renting for 1% is 1,000/month or $12,000 per year. Assuming a 50% expense ratio, you have an NOI of $6,000 or 6% cap.

Monthly rent of .75% gives you a 4.5% cap.

When cap rates really fell, you couldn't find these deals. 1% is probably a good guideline again.

A 50%!expense ratio is tough now too with cost of insurance and property taxes (especially in Texas).

Troglodyte said:

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I think the calculation is $100,000 unit renting for 1% is 1,000/month or $12,000 per year. Assuming a 50% expense ratio, you have an NOI of $6,000 or 6% cap.

Monthly rent of .75% gives you a 4.5% cap.

When cap rates really fell, you couldn't find these deals. 1% is probably a good guideline again.

A 50%!expense ratio is tough now too with cost of insurance and property taxes (especially in Texas).

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100% on the bolded part

1% lease to sales price use to be a target metric for quick deal analysis, but that ratio has not been seen in 4 years or so. New target metric is .8% lease to sales price, but even that is challenging to find.

I know that property taxes and insurance increases are bloating the expense ratios, but I feel like new construction can yield 35-40% EXP Ratios.

MS08 said:

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1% lease to sales price use to be a target metric for quick deal analysis, but that ratio has not been seen in 4 years or so. New target metric is .8% lease to sales price, but even that is challenging to find.

I know that property taxes and insurance increases are bloating the expense ratios, but I feel like new construction can yield 35-40% EXP Ratios.

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And you pay for it up front when you buy right now.