What Are Your Current Cash On Cash Returns

Question

Hey BP,

Would love to get some input from everyone about what kind of cash on cash returns you are finding for buy and hold residential real estate SFH or Multi-Family. I live in Colorado and have a good size portfolio of rentals, but have been unable to find anything that fits my cash on cash return goals for almost 2 years. I am considering looking out of state so I can continue to build my portfolio... here are a few questions:

1. I generally am looking for 20-25%+ Cash On Cash Return. Is this an unrealistic goal given the current market or are any of you finding places in the states that still can produce this kind of return?

2. For any of you who have done so, how has your out of state buy and hold investing turned out? Everything I have is in my state, and I have direct control over the management, so I am a little unsure about out of state hands off investing.

Thanks for your input,

Matt

Matt Rosenbohm · Answer

Thanks Jeff Beard I suppose I should have given some parameters:

Cash On Cash Returns based on 20% down and 30 Year fixed Loans

Jeff B. · Answer

just fyi:  there's a TIME component to CoC.  The original down payment is always fixed, some loans are fixed and the commercial 5+ units are always ARMS.

Over time, as you move rents to stay current with the FMR, your GSI & NOI  increases while your cash investment and mortgage payment stays relative fixed.

My original CoC in '97 was much lower than my final when I sold it in April,'2016.

With an initial LTV of 68.8% from a 1031 down payment, my CoC was  26.2% in '97

Today it's more like 52.4%