What "Number" are investors looking at for their ROI?

[Reece Register]

Here in the Tampa Market we are seeing inexperienced investors wanting to purchase buy and hold properties but not sure what line to look at when evaluating deals.... Cap rate seems to be the common term. If you are financing and holding a property for 5-10 years shouldn't the IRR be the most important number to look at?

[Immanuel Sibero]

The four sources of return rental real estate:

1- Cash flow

2- Loan paydown

3- Appreciation in value

4- Tax savings

- CoC is a measure of return generated by TWO sources (i.e. Cash flow and Loan paydown) on an annual basis

- IRR can be used to measure return generated by ALL FOUR sources (i.e. Cashflow, Loan paydown, Appreciation, and Tax savings) throughout the life of the investment

- Cap Rate... why bother?

Cheers... Immanuel