We care mostly about the actual rental income/yield coupled with capital preservation with the home price appreciation being considered icing on the cake. On our homepage, you can see illustrative yields depending on the property class.
As a bottom line, we target the following for each class of single family home:
- Class A: Minimum rent $1,500/mo, 4-5% cash on cash plus another 2% in mortgage paydown
- Class B/C+: Minimum rent $1,200/mo, 6-8% cash on cash plus another 5% on mortgage paydown
- Class C: Minimum rent $1,000/mo, 9-11% cash on cash plus another 5% on mortgage paydown
- Class C-: We avoid these properties
Of course, all of these figures can vary depending on expense ratios, capitalized expenses, credit loss, and the vagaries of a given rental market, but in our experience, when buying the right homes and doing the right level of rehab, the yields are quite stable