How to evaluate property past the first year?

[Jewel Welch]

Hello BP!

I've been doing some reading and have been watching a lot of videos and learning so much, so thank you guys for that first of all. I had a question about the Cash on Cash ROI when evaluating properties. In watching the videos and even in beginning to do analyses myself, I understand the concept of the Cash on Cash ROI, but that number is really only relevant for the first year, correct? Since it's taking into account how much you're initially investing in the property?

What if you have a property that doesn't really give you a great Cash on Cash for the first year, due to having to put a higher amount down or maybe into repairs, but the second or third year it could be better? How do you evaluate for that?

I ask because I'm currently looking at a duplex, and based on the numbers I've been given, and even with being absurd with my offer price, the Cash on Cash ROI is terrible, but I know without a doubt that I can raise rents in both halves. There will be some repairs and such done, but I know the area really well, and I know getting it rented will not be an issue.

How do i weigh that against the numbers I currently get when looking at the deal?