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Updated almost 8 years ago on . Most recent reply

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6
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8
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Isaiah Turner
  • Rental Property Investor
  • Houston, TX
8
Votes |
6
Posts

COC Return Question!

Isaiah Turner
  • Rental Property Investor
  • Houston, TX
Posted

Hello all, 

Lately I've been studying and trying to better understand the analysis of rental property. I understand that the formula to calculate COC return is: COC = Cash Flow/Investment basis. Part of the investment basis includes repairs. Say 2 years down the road, I must repair the HVAC system, would I add that dollar amount to the investment basis? Or would it already be "part" of the equation since capital expenditures are part of calculating expenses to determine NOI which, in conjunction with debt service, is used to calculate cash flow. Seems to me that, although it is considered a repair, adding this dollar amount to the investment basis is pretty redundant. Thanks in advance for your responses!

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