How do I calculate cash on cash return for a BRRR

[Steven Haller]

Do i calculate cash on cash return on the cash left in deal after refi or also on the cash I used to purchase the property?

Here is a simplified scenario:

100k to purchase and repair.

Refi after 1 year; new loan amount 75k.

Cash left in deal 25k

Net income (after mortgage) 10k year.

Do I calculate ROI on the 25k left in deal or on the 100k total used to purchase the property.

(numbers are not a real deal, I am just trying to understand how to calculate my return).

Thanks.

[Joe Villeneuve]

CoCR is the simplest formula there is.  It amazes me how many complicate it.

Here is the basic definition:

Total Cash (nothing but actual good old all American Greenback) out     =    CoCR (%)
Total Cash (same s above) In

...over ONLY the first year. Only THE FIRST YEAR....and ONLY Cash. Not depreciation, not CAPEX deductions, etcc...only CASH movement, actual cash in and out.

Example #1:

Cost = $100k
Cash used = 100k (as in 100k in)
Flipped after 12 months (1 year) for = 125k (as in 125k out)

CoCR = 125% (yes it is).

Example #2:

Cost = $100k
Cash used = 100k (as in 100k in)
Rented for 12 months (1 year) for Net Cash Flow (not rent, not including CAPEX hold backs, etc...) = 6k/year (as in 6k out)

CoCR = 6%.

Example #3:

Cost = $100k
Cash used = 20k (as in 20k in, 80k loan)
Rented for 12 months (1 year) for Net Cash Flow (1 year) for = 6k (as in 6k out)

CoCR = 30% (yes it is).

NOI is different.