Cash on Cash versus Equity

[Eric C Gunderson]

I have a BRRRR property in escrow with opportunity to backout due to some inspection items the seller is not willing to fix. The deal will provide over 20% Cash on Cash but all in cash will be essentially at the expected appraisal value. Therefore, I'll leave in quite a bit when I refi after rehab but make virtually nothing when I sell it down the road. The area doesn't appreciate (depreciated over last ten years or so) at all so time will hurt me more than help me. My analysis/numbers are solid so my question is should I buy a property that will indeed provide a 20% plus return knowing I'll make nothing on the back end?

[Jaron Walling]

@Eric C Gunderson You're best bet is share the numbers and discuss the strategy. I'm guessing your calculations for the COC is off. It's not impossible but given today's market that's a BIG number. If you're stuck with a large amount of cash in a BRRRR deal you're simply not buying it low enough or over budgeting for the rehab.

The area depreciated over the last 10 years?? The cash-flow better be worth the risk otherwise I wouldn't even consider this deal. Actually, I'd pass on this property based solely on that. That's just my opinion. Appreciation is wealth building pillar so I expect my properties to keep up with inflation.