Bigger Pockets Rental Calculator

[Sammy Patel]

I have a basic question that came up when dealing with my realtor. Using the BiggerPockets rental calculator you get a Cash on Cash ROI. However, it uses the P&I in that calculation. Does that COC ROI represent what I am actually getting since the Principal in the P&I will be actually returned to me when I cash out, so in other words if I was analyzing a rental property with P&I and the COC ROI was a small <2% but when I subtract the Principal it would give me a COC ROI of 10%. Isn't that the more accurate ROI?

Any and all help is greatly appreciated!

[Sammy Patel]

Thanks. My wife and are trying to get our first property and I keep passing on properties because the COC ROI is 1% or 2%, where we might be -$20/month in cashflow but may have $10K-$15K in equity. My wife thinks with my requirements we will never find anything. When I include the debt service gain the property shoots up to 10% return. My wife is getting on me for being too stuck to the COC ROI. She thinks we will never find anything in the 10% range when I do not include the debt service pay down. I am not including the appreciation because that is not an exact science. However the debt pay down by someone else is a gain. Just not sure if it should be used to determine ROI to make a decision to get the property.