Cash on Cash return question

[Dave Page]

So I currently own a 4 unit rental that nets about 32k and cash price was 360k.

I have about 600k left in cash to invest and was considering a 16 unit apartment. The idea is to get only one property instead of several. But i quickly realized buying a property between 2mil and 3mil after paying 30 year mortgage would produce about the same cash on cash (9% ?) income as a 2 more 4 unit apartments if I pay cash outright.

So can anyone tell me a reason to have to have to deal with keeping 16 units filled and having more risk that buying smaller units?

[John Brinkos]

You are leaving out the mortgage paydown (by tenants) and appreciation that comes from rent raises...since NOI drives value in commercial and not market appraisals you can raise rents $25 in 16 units and increase property value by $80,000 at a 6% CAPRATE. So much higher growth in IRR can be achieved in commercial MFP then residential.