Real Estate Agent · Deltona, FL · Member since 2018 · 13 posts · 1 vote
Hi All,
What numbers would you look for on COC and cash flow ( Using the rental Caculator) when purchasing at 100% cash.
While using the rental caculator, I had to go way down on the purchase price ( to get at least 10% COC) rather then calculating with a 20% down payment option..Where the purchase price would be reduced to reasonable price..Any advice on what numbers to look for at 100% cash purchase?
P.S *Any feed back would be very much appreaciated.. Thanks,
Real Estate Agent · Deltona, FL · Member since 2018 · 13 posts · 1 vote
6y
Hi Mike,
Yes I am confused with this too...
The way I get it is that COC is on the actual cash you invest..
e.g with a 20% down payment your COC will be more as you are using less cash up front.
but with 100% your COC will be less on the purchase price as you are using more money up front..
I would be happy to know what COC to look for at 100%..
The best way I figured out in my deal is to calculate the purchase price using 20% down with 11 - 12% COC...Later pay 100% cash for it (Your COC will go down to 8-9%)...but in the long run you are not paying any interest, BUT THE CASH FLOW WILL BE ALMOST DOUBLE with les COC.
Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
6y
"What numbers would you look for on COC and cash flow ( Using the rental Calculator) when purchasing at 100% cash."
Well, if you're 100% cash buyer C-o-C = CapRate = NOI/Price. If I use 6% CapRate, on $1M property = $60K/year NOI. So CoC = 6%
If I do 70% LTV ($700K financed) at 3.5%, my ann debt = $37,720/year.
My CFBT = $60K - $37,720 = $22,280/year.
My CoC with this debt = 7.46% = $22,280/$300K = CFBT/Down
Since it's pretty basic as a decision metric, if you do a XLS, put some numbers in and do at least ONE calc by hand to verify. On a lot of free XLS, I find some basic math errors.