Cash on Cash Return on Investment

[Ariel G.]

Hi. I'm looking for the experimented people's help. I'm looking for your feedback on CoCRoI calculation.

CoCRoI: (Cash Inflow - Cash Outflow) / Cash Outflow

Being....

Cash inflow

Selling price - pending mortgage = 

Selling price - (initial mortgage - total capitalized amount to date)

Cash Outflow

Money down + closing costs (bank+ RealEstate agent fees) + administration costs + taxes paid + maintenance costs + total interest payments paid to date (monthly payment - capitalization)

1. Am I missing, duplicating, erring in something

2. Whats according to your knowledge and as well your experience is a good or realistic percentage for CoCRoI.

3. Is this useful for analyzing a potential deal or also for a deal that you already have?

4. Is this the best index to analyze a REI? Is there a better one according to your experience? Or depends on the alternative action you are thinking to take to decide which index to use?

Thank you very much.

Ariel.

[Brent Coombs]

@Ariel G., CoC = all the income derived from the investment per year, divided by your initial money down + all subsequent expenses in that same year, x 100 (expressed as percent).

eg. You bought a property for $100k (including closing cost) with $25k deposit. During the first year, it generated $12k gross return, and ALL expenses including mortgage happen to total $45k, meaning your CoC return = $12k / $45k, x 100 = 26.66%. (I think that's right)...