Quote:
Originally Posted by willystyle
4444,
What's the typical ROI on an average property for your clients (taking in account that I borrow from a mortgage broker vs. 100% liquid cash)? How much do your clients invest in one property on average?
Do your clients typically purchase their investment property entirely with liquid cash? or do they seek lenders (banks)? Also, at what price point do you see the most returns (ex. 150-200k home)?
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Average yield is:
100% cash - 8 - 10%
Using leverage offered to my investors - 9-12%
When you start looking at capital appreciation to get an ROE (or ROI) using conservative estimates for cpaital appreciation over 5-10 years)
100% Cash - 15%
Levered - 20+%
These numbers are all before we split profit - they are the properties' yeild, ROE - obviously there is a split of profits between me (the partner that has the knowledge, enabling the investment and managing it fully) and the money partner (who wouldn't be able to invest in US property otherwise, who just gets quarterly cash and financials with updates on how hte investments are doing / the macro environment on where we invest)
Clients invest about $100-120K if 100% cash, or a little over 35% of that if using leverage. In fact, now that I have these mortgage products available to me in the US, I will be going back to my investors and seeing if we want to use this leverage to our existing properties.
My investors come up with cash in whatever way they want, I suggest they use HELOCs (home equity lines of credit) at about 3.5% variable, or take 2nd mortgages on properties at about 3% for 5 year fixed and use that money, otherwise we will be using my mortgage products going forward now
as for how much to spend, depends on the person/area - for me, I'm buying in the $90-120K range, newer properties with a good commute to downtown - I feel these places have hte most capital appreciation potential, which is where the money is to be made, its also nice that they yield about 9, 10%