Cash Flow vs Cash on Cash ROI

[Nathan Hui]

Background: Looking to house hack a multi family 2-4 unit.

Two financing options: Conventional 20% down vs FHA3.5%

When I analyze these properties I am realizing a theme. Higher down payments are allowing for higher cash flow rates but diminished Cash on Cash ROI. Lower down payments are yielding lower cash flow with excellent cash on cash ROI.

Is there a superior metric to follow? Cash flow vs ROI?

[Brian Sparr]

Hi @Nathan Hui -

In my opinion, there's no right or wrong answer here ... it's all about your perspective and goals.

If you've got a good paying job that affords you the lifestyle you want, cash flow doesn't need to be your focus.  Instead, I'd be all about maximizing the growth of my capital.

On the other hand, if I'm transitioning into retirement, cash flow is now a top priority.

Your stage in life and your goals will dictate which metric to focus on.

Good luck!