Cash-on-Cash Return Calculation

[John DeRosa]

Hello

I am new to real estate investing and looking for my first small multi-family property (3-7 units) in NJ. I believe I have the COC calculation correct; however, the deals I am analyzing are not even close to the COC suggestion of 10%+. I am annualizing the rents for the property, deducting vacancy and expenses and calculating a Net Operating Income. I am then subtracting my mortgage (principal + interest) payment from my NOI to get my below the line NOI or cashflow. Finally, I divide that number by the amount I have invested (down payment + closing costs + any upfront repairs, etc.) to calculate the COC. Is that correct?

If that is correct, am I looking for deals in the wrong place? I am calculating COC returns of 1% or 2% at best.

Any help would be appreciated.

Thanks.