CoCROI and IRR Goals

[Shane Malloy]

I am a new real estate investor and really appreciate all the information that is shared on the BP forum.  I live in Castle Rock, CO so right between Denver and Colorado Springs markets. 

As I am putting together my business plan, I am struggling with what my goals for CoCROI and IRR should realistically be. Would love to get some guidance from others that may be in this market.

Here is a draft of what I have:

To have five single family or three multifamily home with 5% in cash on cash ROI, an overall IRR of 10%, and over $1.3M in property value in the greater Denver area and Colorado Springs market by 2023.

[Andrew Johnson]

Shane Malloy So my advice to you would be to use a couple of your assumptions and work in reverse:

$1.3M / 5 SFRs = $260K
$260K * 25% down = $65K

Does a $260K home in either of those markets yield (after debt service and cap-ex holdbacks) more than $271 per month?

If so... 👍🏻

If not... 👎🏻

If the answer is “no” then how far under market do you have to buy the property? 5%? 10%? 30%?

That should give you a more realistic gauge of if it’s achievable or pie-in-the-yummy-sky.

I don’t know market so I don’t know the answers. But if you’ve been doing your diligence I’m sure that you’d know.