Quote:
Originally Posted by Yuri
What’s the ratio between residential rent and the real estate price in the US, in general? Down here it’s between 0.2%-0.5% month (500k apartment goes for 2,000/month) depending on the place.
|
An investor generally aims for a 10% capitalization rate, however, some people have different definitions for cap rate. One pseudo-standard is to only assume 10 months of revenue per house/unit.
So if you pay $250,000 for a single-family home, to earn 10% you need to rent it for roughly $2,500/mo.
In the cheaper markets, it is (or rather was) possible to get 10%, for example $1,500/mo for a $150,000 home.
But in expensive cities like Los Angeles, where many homes are priced over $1 million, you're probably not going to be able to get 10%. Instead, you justify the investment in anticipation of appreciation. The huge risk, of course, is the property going down in value.