Cash on Cash Return on Investment

3 Replies

What kind of COC ROI are you seeing for buy and holds in your markets? State what % you are using for vacancy, R&M & management. In London I've purchased buy and holds around 16%. In Sarnia I'm finding it is around 8-12%. Accounting for 5% vacancy, 5% management & 7% R&M. All just personal experience of course. Whats the highest & lowest COC ROI in your portfolio? Let get some good discussions happening in the Canadian forums

Typically in my market we account for 8% vacancy, 10% R&M, and 10% management fee. The fees can vary by property and property manager but those are rough figures. 

Cash on Cash return varies greatly by neighborhood in Rhode Island.

Hi Troy.

I work in Sarnia and live in London. I'm wondering whereabouts in London you were able to get 16% COC? Are you including equity from mortgage payments in that calculation?

Our property was purchased not long ago for $615,000 with annual gross rent of $48,000. Taxes, insurance, maintenance, repairs, vacancy, and utilities total $17,000 annually. Mortgage payment is $26,700 annually. 20% downpayment and closing costs totaled $134,000. These numbers give me a 3% COC.

The property is newly renovated, with new windows and roof. No large expenses coming in the foreseeable future. Even so, we were conservative with repair and maintenance costs at 12%. Vacancy is at 0% given that the units are renovated, show well, and are very close to downtown/Victoria Park.

This was about as good as we could find, at least in somewhat desirable areas. Many multi-family homes we looked at were not cashflow positive from the start. What do you think of our purchase? 

http://investingarchitect.com/how-to-calculate-the...

The above link delves into COC calculations. Many more variations on the net.

I generally purchase with 100% financing and try to continually remove equity from my properties. COC is not a realistic calculation for those investors that allow equity to grow in a property since it is only accurate the day you purchase the property. Within one year the number is no longer valid.

Realistically the best you can do is a very rough guestimate until all numbers are in on the day you sell. 

I purchased a property 10 years ago for 400K rent $4800/month 100% leveraged. Value of the property is based primarily on cap rates. Rent is now approximately $7800/month. Unfortunately due to the type of rental I can not get all my equity out of this one. Anyone's guess as to equity till I sell.

Updated 6 months ago

Using a internal rate of return (IRR) is more accurate but likely not preferred by most investors since all they are really seeking is a warm a fuzzy feeling that they are making money not how much money.r mod

Join the Largest Real Estate Investing Community

Basic membership is free, forever.