- Property Manager
- New Orleans, LA
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Cash flow vs Cash on cash ROI
Lately I've been torn on which path to take. I typically shoot for Brandon's suggested minimums of both cash flow and cash on cash ROI, and I have achieved that with almost all of my investments i currently have. My question is, is one more valuable than the other? For example, I've recently locked up a property that will be a BRRRR that will allow me to pull out all of my money giving me an infinite cash on cash ROI. However, the cash flow is under $100 month. I will also have 30% equity in the deal as well. My main concern is, although I have no money invested, this doesn't move my needle much in regards to cash flow, which I have always said was my main goal.
I would love anyone’s insight on this. My thoughts are is too simply flip this one, make a quick $25k+ on it, and then roll into a better cash flowing asset.
Thoughts?
- Michael Baradell
Most Popular Reply
@Michael Baradell none of the measures taken in isolation are worth anything. Caprate, COC, cashflow they are all too easy to fudge. Personally cash flow is my goal but what is the point if you pay cash for a property just to have the cash flow look wonderful. I try to look at the total investment but that can be very subjective too and it is impossible to know today what it will look like in 10 or 20 years. Age will have a bearing on things too. At 40 you are empire building so your financial goals are very different from what is important to you later in life. No one size fits all makes it that much more fun!