Tax Depreciation 101

[Nic S.]

Hi BP, 

Can someone talk to me about the amount of value you place in Tax Depreciation when evaluating deals. I'm looking at a SFH that cash flows $175 with a lower CoC of 8%. The seller is telling me that I should consider the Tax Depreciation value, not just cash flow and CoC return.

This is a new concept to me - in all my readings and pod cast listening I've always heard that Cash Flow and CoC are two solid metrics for success.

I read this awesome article: https://www.investopedia.com/articles/investing/060815/how-rental-property-depreciation-works.asp that gave me a basic understanding of how TD works. 

I'd love your thoughts on how much you factor in TD. into your analysis. And if my CoC returns aren't met, would you still do a deal?

Thank you!