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General Landlording & Rental Properties

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Jonathan Edmund
Pro Member
  • North Myrtle Beach, SC
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54
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Cashflow or Cash on Cash Return?

Jonathan Edmund
Pro Member
  • North Myrtle Beach, SC
Posted Oct 16 2020, 11:57

I am looking at buying a property in my market. It's just an efficiency condo and it's currently rented for $700 a month. Tenant in place through May 2021. I ran my calculations on it and if I purchase it and put 20% down, I'm looking at a $167 a month cashflow after factoring in taxes, mortgage, HOA fee and costs that vary. But my cash on cash return will be 19%.

If I pay cash for the unit, I can cashflor $329 a month but my cash on cash return is only 8.5%. Since rates are so low right now, would it make more sense to finance it and keep my cash so I can try to get another unit sooner, or is there a good reason why going cash makes more sense in this case?

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