Cash on cash return on investment

4 Replies

Greeting everyone I don’t post on bigger pockets as much as I should due to the fact I’m still trying to learn more about real estate. My question to you guys is if a property has a positive cash flow but the cash on cash return is pretty low would you still take a chance on it???

No.  The  CoCR tells you how quickly you will recover your cost (how much you spent out of pocket) on a property.  The lower the number, the longer it takes, and the slower it takes as the more it costs to move forward.

It depends on your goals as Joe says its going to take longer for the property to pay itself off but are you adding value so you can refinance and move onto your next deal?  Do you still have cash, lines of credit or other funds that you can use to get your next deal in?