When to start calculating COC vs ROI?

[Thuy Pham-Satrappe]

Hello!

So I've been running numbers on a rental property where the ROI is fantastic (80%) but the COC isn't so hot (5%).

At what point would it be wise to focus more heavily on COC vs ROI?

I'm also learning the BRRRR Method, so not sure if/ how COC factors into that if we are getting our money back after we rent it out?

Thanks in advance for your insights!

[Joe Villeneuve]

Since CoCR is only measured during the first year, based on the initial cash you put into the deal, you should start measuring it immediately.

Also, ROI is a mixture of actual profit and a variety of imaginary, hopeful financial gains. Personally, I would leave your ROI calculation where it belongs...with your stock market investments. ROI is a valid measurement, but it reduces REI to the most basic and risky returns estimates. It depends on future events you have no control over.

Basing your financial gains on cash return measurements, no only is more concrete, but it allows the REI to take full advantage of all the reasons why REI is far superior an investment than any other.