Originally posted by GIMD
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Citrus trees! Magical! I would love that.
Second home: by definition it is a second house and thus not essential.
Am i pessimistic or conservative and careful?
You might be right, but RE is a very inefficient market and docs (in my opinion) are frequently at an informational disadvantage.
There will be winners and losers in inefficient markets.
Coastal RE has a lot of variables.
Second home.
We can disagree with wether it is an investment and/or a luxury consumption item.
It sounds like you did really well.
You might be better at this than I am.
I live near Boston and I am looking at Cape cod.
Love it! 1.5 hour drive. Great fishing!
Homes i like are around 400-700k.
If I buy for example, a 500k house, how much rental per year (month) would i need for it to be a good investment?
What cap rate is acceptable?
My hard core RE buddy (in Florida, 20+ rentals uses a cap rate (R) of 8-10% for good “investments”.
If the desired investment cap rate (R) of 10% (what my RE investment buddy uses) how much monthly and yearly net operating income (NOI) would I need for it to be a “great/good” investment?
Value = NOI/R
therefore NOI = value x R
Value = 500k, I would need a NOI (net operating income) of 50k per year or $4,167 per month.
Is that possible? reasonable? likely?
Perhaps but the NOI by definition is minus vacancies, expenses, utilities, repairs, and management costs.
I imagine some crush it and some don’t.
I am a very simple average doc and I don’t think of myself as special or talented so i will probably just assume the worst and proceed with caution.
My wife says: “you can rent a lot of beach houses for 500k……”
I say, “yeah honey but……i could keep my stuff here and plant trees and build a green house and retire here……she rolls her eyes…..one house, one spouse…..blah blah”
She did say: “maybe…..one day…”
when i showed her an awesome one, but she might have just felt sorry for me.
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