Struggling to decide to sell or not.

[Alexander McConaughey]

I have a property that is slightly cash flow positive. Originally I was thinking of selling it because there is a lot of capital in it, and I want to potentially use that capital elsewhere. The problem is I can't seem to get over what appears to be an extremely lucrative cash return. I feel like I'm doing my math wrong. 

I bought the house in 2019 for about 445k (170k in downpayment/closing costs). 

I'm looking at selling it for around 550k. Problems I'm struggling with, do I use the CoC Return of only the sale price, or do I calculate it against the entire amount after paying back the loan, taxes, closing costs etc. The renter's have paid into the equity, does that count toward my CoC return?

I sorta fell into this on accident, and I'm really in over my head. My original plan was to get the money out and use it to potentially buy a cashflowing business, but after crunching the numbers, this seems safer. Any help or advice is appreciated, this is a big step for us.

Numbers look something like this:

Initial Cash in	$170,000.00
Purchase Price	$445,000.00
Sale Price	$550,000.00
Commission	$33,000.00
Taxes	$16,625.00
Closing Costs	$5,500.00
Loan	$257,000.00
Profit	$49,875.00
CoC Return/Year	7.33%

[Jon K.]

Cash on cash return is a measurement of the net cash return you receive on the capital that you yourself have invested in the deal. In other words, how much rent money is left over after paying the monthly bills, times 12 (to annualize), divided by the total amount of cash that you used to purchase the property.

It does not factor in things like appreciation (forced through a remodel or otherwise), depreciation, or debt paydown.

CoC is just one metric you can use when evaluating how good an investment is because there are of course other factors such as the appreciation, depreciation and debt paydown that CoC ignores.

Whether or not an investment is "good" is very subjective and should be based on your own personal investing criteria.

I can't explain it, or anything, better than J Scott so I highly recommend you check out his book Real Estate By The Numbers. It will provide a lot of insight into this sort of thing.