CAP rate and COC Question

[Chris Adams]

Im revamping my spreadsheet and I want to get this right.

My model involves me buying distressed SFR properties, I rehab them and then rent them, out or flip.

If I hold the property as a rental I get a mtg that will give me back 100% of my hard cost for the purchase and rehab.

If I hold the property as a SFR, should I calculate Cap Rate based on the ARV of the property or my actual investment amount. My thought here is that by holding the property as a rental, I am deciding to leave all of my potential flip profits in the property. Therefore I should base my Cap Rate on the ARV, and use the unrealized net profit to calculate COC.

Should the unrealized net profit from the sale be pre tax or after tax?