[Calc Review] Help me analyze this deal. Student Housing

7 Replies

View report

*This link comes directly from our calculators, based on information input by the member who posted.

Could someone explain to me cash-on-cash return?  I keep looking it up and heard many times what it is but it doesn't stick.  I cannot remember what to adjust to get a cash-on-cash return I like.

Cash on Cash is the % of the return ( your profit after expenses) against the amount of personal money you have invested in the property. the less money you have into the property and the greater the profit the higher the cash on cash % will be.

I looked at your report after my post, unless you are paying full purchase price in cash you would lower your down payment. so if you put 20% down, that would be 36,000. that will change your COC amount to a lot better number, if you paid full price as you show it is saying you would make a return of little over 2% on the money you put in.

Actually, I ran the report again with 20% down and got a negative cash flow and CoC because I have to service the debt. I could try it with a lower interest rate; I just heard on the radio that rates were about 6%. I tried lowering the purchase price by $23,000 (light repairs @ $10 per sf).

If you are getting a negative COC with the service debt, then the property will not make you any money but cost you money. that means the percentage in your original calculation, paying full price, would be the most you would make on the property. but you would not want all that money tied into one property, yes you would make money, but you may make more than the 2% in the stock market. If you can put as little of your money into the property and make money after all debts than that is a winning combination. you would be better off lending that money to another investor and making more % on your money without having the hassle of being a landlord.

Btw, in your description it says rent is $1125, yet you have $1550 in the report, and your water is awfully high per month, $225 ?. I have 4 student rentals - 24 bedrooms all together, 3 of which are 2 family, 1 has 8 bedrooms, that one has a monthly water expense of $65 ( 2 full baths, 2 half baths and 2 laundry machines). you may want to re check the numbers.

Thank you. I know I put the Water bill that high, but that is what the owner said he pays and utilities; he didn’t say what kind of utilities. I didn’t put anything for the garbage electricity etc.