Cash on cash question

[Thomas Hawver]

I am looking at a few deals and am having a hard time making the CoC make any sense. Planning on 25% down and a conventional loan for the rest, near 7%

Basically none of the deals cash flow, much less get anywhere near a CoC of 10% I can sort of rationalize it if it at least pays for itself (appreciation/tax benefits), but unless I can either get the NOI way up or the sale price way down why wouldn't I invest the cash in the market?

I guess I'm looking for a change in perspective or a different metric? Also I have not negotiated on any of these so should be some wiggle room on the sale price. And they're in the $700k to $900k range. TIA

[Bill B.]

The more expensive the property the worse it’s performs as a rental. Try looking for properties half as expensive. An $800k home doesn’t collect twice the rent of a $400k property, and certainly not 4x the rent of a $200k property. 

If they did, everybody would buy one $4M home instead of 10x $400k properties.