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?

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 Within one year the number is no longer valid.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 over 1 year 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

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