What is a fair COC return to target for a passive investor

4 Replies | Cleveland, Ohio

Hi all,

On the Toledo forum I mentioned hoping for a 10% cash on cash return for turnkeys and several people said that's too low for Toledo. That's always good to hear.

Plans have changed a bit and I think I now prefer to deal scout the MLS with an investor friendly agent, then giving her local management duties while I do my part remotely in terms of marketing vacancies, payment handling, repair requests etc.

What range would you guys target as a cash on cash return for C/B properties that are reasonble MLS deals but nothing stellar? Bank financing 75-80% loan to value.

Maybe 12% cash on cash return, up to 15% max? Putting 20k down that would be $2,400 to $3,000/yr in net cash flow. Seems like a pretty high amount to me, I'll take it if it's sensible though!

@Sean D Every market is a little different when it comes to cash-on-cash. What CoC return are you looking for? Then target markets that have those types of returns.

If you are giving your local PM management duties, then is there a reason to keep the tasks of marketing, payment, and repairs instead of allowing your PM to handle those?  How much will you really be saving by doing those tasks yourself?

Originally posted by @AJ H. :

@Sean D Every market is a little different when it comes to cash-on-cash. What CoC return are you looking for? Then target markets that have those types of returns.

If you are giving your local PM management duties, then is there a reason to keep the tasks of marketing, payment, and repairs instead of allowing your PM to handle those?  How much will you really be saving by doing those tasks yourself?

Hi AJ,

I'm of the belief that the best job is done by myself. Well, I have a virtual assistant who is quite good in other areas and is happy to take on work like this.

The agent/manager will still have a fair amount of local responsibility: property showings, lease signings, eviction oversight, etc. But I want to offload tasks where I can.

As for a target COC return, I'll take whatever the top option is without spiking risks and management intensity. To me that means B/C properties in Cleveland. Still curious what a reasonable target COC return is if anyone knows

 

@Sean D we invest in Toledo area but wanted to point out that what you are describing is not passive. You are actively managing the realtor, the VA, the tenant etc.

With that said. The rents are strong in Toledo but deals are harder to come by. The cash on cash changes if you use financing or cash. You need to lay out the full strategy to compare apples to apples.

@Sean NA I see deals-a-plenty in the Toledo markets and myself personally don’t entertain anything under 15% minimum for my investors. 10% are easy to come by but I prefer 15% minimums