Cash on Cash Expectations

[Anthony Arender]

I invest in the Northern Kentucky market, across the river from Cincinnati.  It is next to impossible to find decent properties that cash flow for an 8% coc.  Should I settle for less in order to get my cash out of the bank and into a property before rates go up, even if it is only at a 3% coc? Or wait for a dip?  Some guidance here would be appreciated from investors with more experience than I have.

[Chris Webb]

Quote from @Joe Villeneuve:

Quote from @Chris Webb:

Hi @Anthony Arender, I would ask what is an average deal in the market you are looking in. There is someone who is earning a profit and they probably bought a great deal. However, you cannot find a great deal until you know what an average one looks like. Review your market and run your ConC calculation for a few deals and look for similar numbers. If you find a few that are similar, that is probably average. Now just look for deals that are better than the average. Good luck and keep the faith, REI is a long term play and the deal of a lifetime happens weekly.

Why would you deal in averages?..and why would you accept the market you are currently investing in?


If you base your deal on the average deal, you run just as much of a risk of that deal going south as it could go north, and since the average is made of more than 3 deals (1 high, 1 low, 1 avg), then the odds of any deal ending up at "average" is far from a possibility...so why invest based on it?

If your market doesn't deliver what you "need" it to deliver, then don't invest there.  Find a market that does.  The market isn't flexible to your deliver your needs.  Your needs shouldn't be flexible to your market.  However, the market you choose can be, and should be, based on those inflexible needs.  That's why they are called "needs".

Hi @Joe Villeneuve, I think you may have misread the post. I said look for great or "better than average" deals.

I am saying that someone is investing in every market and earning a profit. I agree that if you cannot find your metrics in one place look at other places. However, I would also argue that you need to know your average deal and see if their is movement in to different inflection points. This cannot happen by looking at a market only a few times and then returning a few months later, at that point it is to late. Knowing your average deal is what is critical and often overlooked by investors.