Cash ROI vs Total ROI when investing in a rental?

Question

Looking at the spreadsheet produced by someone famous around here, it notes these two numbers.

I understand the difference, but was curious which one you lean on more when analyzing a property.

What Cash ROI would you accept?

What Total ROI would you accept?

Ryan K. · Answer

I personally look more at total ROI which included principle pay down. Appreciation can also be figured into the calculation but it is more of a guesstimate.

Brent Coombs · Answer

I take it that you are just rephrasing the age old riddle: focus on cash flow, or appreciation?

Trouble is: when trying to analyze in advance, BOTH sets of numbers are largely guesswork!

Over hundreds of previous threads on the topic, the consensus seems to be: try to find the "sweet spot" in the best (likely appreciating) market you can afford, that still gives SOME cash return.

Another trouble is: people talk of averages, whereas every property bought is SPECIFIC.

That is to say: we will NEVER be completely right in our Cash ROI or Total ROI pre-analysis!...

Cash ROI vs Total ROI when investing in a rental?

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