What's a good CoC number?

4 Replies

Hi all,

Got a question for seasoned veterans around here. After reading some of the discussions, I'm not sure if I fully understand what makes a good CoC number. The numbers I see are around 20%, give or take some, which to me, seems out of reach.

Let's take a look at this hypothetical property (managed by PM)

Price: $90,000

Initial investment (DP, rehab, taxes, insurance, PM fee): $35,000

Estimated rent: $1,400

Cash flow after expenses (including PM fees): ~$420

CoC%: ~9.5%

Does this number look good? I'm working with a PM, and their CoC numbers are nowhere near 20%. Most are around 5% up to 10%. I must be missing something :)

Are you paying cash for all those costs you stated?  

If that's the case, you have spent $35,000 and will have received $5040 back in the first year from the cash flow. That works out to a CoC return of 14.4%.

In any case, I don't like to accept anything less than 100%...as in I want all the cash I spent back to me within that 1st year.

@joe villenueve - Yes, that 35k is all cash. 20% DP, $10k rehab, 3.5% acquisition fee, etc.

Could you explain more how you can get 100% back the first year? Even without PM, that wouldn't be possible.

100% makes the 14% look so small :)

Originally posted by @Franky Maslim :

@joe villenueve - Yes, that 35k is all cash. 20% DP, $10k rehab, 3.5% acquisition fee, etc.

Could you explain more how you can get 100% back the first year? Even without PM, that wouldn't be possible.

100% makes the 14% look so small :)

 That isn't a simple answer, but there a a number of ways to do it.  It would be impossible to explain in this format.  If you're interested P.M. me and I'll fill you in.  Her are a couple of ways that are pretty simple though:

1 - One of the methods is to NOT just do a 20% DP, but pay 100% cash.  This allows you to refi out all of the money (assuming you bought it right).

2 - In your case, you could sell equity in your property to another investor that has limited funds, and wants to get into a Turnkey deal.  This would be cheaper in most cases than getting your money back in a refi loan or a 2nd loan on the property.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.