Cash on Cash NOI Calculation- Can someone help me??

[Chris Risi]

Hi Guys! I do flips in Los Angeles and Phoenix and I'm trying to use the BRRRR Calculator to analyze some deals. Does anyone know the variables that effect the Cash on Cash NOI calculation the most? Like increasing rents, decreasing monthly costs, etc...

Thanks!!

[Lee Ripma]

Cash on cash - you just have to understand what the numerator and the denominator are. The numerator (the top number) is the net amount of money your property brings in a year. So if you gross 50k and your expenses are 25k your NOI or your top number is 25k. Your denominator(the bottom number) is how much cash you outlay. So if you are in a property all cash it's very different than having 80 LTV. BRRRR often produces very high cash on cash returns because the amount of money in the deal at the end if low. So big numerator, small denominator, high cash on cash. So the big drivers of cash on cash is actually how much cash you have in the deal. Cash on cash (as the name implies) is how much money (NOI) your property produces for the cash you have invested. So less money in the deal or more money being produced are the big drivers here. Does that help?