For anyone who has deals under their belt, I know typically 10-12% is a good ballpark but I'm curious to know if there were times when you went through with a deal when the COC is 8% or below? I'd love to hear anyone response especially ones in the North Jersey area!
Ive had negative cash on cash.
9%, but that was a long time ago. As of the last 5 years, the lowest has been 30%....and that was a property I had with a partner where I foolishly let them have more control than I usually do.
This is a hard question to answer because it depends on what and where you are buying. For instance I’m renovating a 14-unit in Phx and it will be just over 8% cocr. If I were in KC, Dayton, Greensboro I would want to see a higher return CoCr.
The reason I am ok with an 8% in PHX is there is a lot of migration to PHX, specifically businesses. The rents on average will move a lot faster than a KC. For instance I am already getting over my projected rent and based on what I should be able to get rents to I will end up closer to 10-11%.
@Matthew Zelaya this is an interesting question for me as I’ve never gone back and double checked that a property met its pro forma, and never had the desire to do so.
It seems to me that after the first calendar year, one should determine an IRR rather than a COC%.
To answer your question, I have a non performing duplex that is about 5% COC. I made a few rookie mistakes and over renovated it, so the problem was me rather than the deal.
15% (IRR) was my lowest, but I don't regret making that deal (first because it wasn't that bad, and second because I learned a lot along the way).
@Matthew Zelaya below 0%