203K Loan Impact on COC Return

[Patrick Fermo]

Hey Everyone,

I'm trying to run the numbers on a potential rental property deal I found using the BP rental property calculator. The COC return is low, at 2.23%- however this assumes that I'd be paying 48,000 out of pocket, but that in fact is not the case. My plan is to house hack with a 203K loan for the estimated 25,000 in repairs so my only out of pocket cash invested is the down payment and closing costs. So my question is this- is that 2.23% accurate? Or because I'm using financing to fund the repairs, should that percentage be higher? If my explanation isn't clear please let me know so I can clear things up. Looking forward to all of your inputs.