COC return calculation

[Haley Varner]

Would you increase the denominator in the COC return calculation (amount of cash invested) as you pay down principle? Since you are technically more heavily invested as time goes on, with more equity-or cash- in the deal, but your stabilized cash flow stays the same (or increases marginally w rent escalations), your cash on cash return would decrease year over year. So this could be an argument not to pay down your mortgage faster than the amortization schedule mandates. This logic suggests here is a tipping point where you would cease additional pay down above the amortization payment -perhaps once your COC declines below a certain hurdle - for me that might be 12%. Though