4% CoC Return with 20% IRR

[Phillip Murphy]

I have recently invested in my first two properties on a 20 year-amortized 5-year balloon loan. They are both 2 bed 1 bath single family homes in rural Illinois.

My CoC return for these two properties combined is only about 4%, but my projected 5-year IRR is 20%. I know a good chunk of the low cash metric is due to the 20-year loan amortization, but what would an experienced investor make of this for a new investor? My wife and I work W2s with healthy income, so cash flow at this scale is not necessarily a priority for me.