Lower COC but good IRR- good investment ?

[Chris K.]

Hi,

My COC on potential deal is lower (conservative) around 2-6%. But IRR is more around 20-32% (depending on my final purchase price .

I am long hold on this property , in an area where I believe it will really gain in value (this is the icing on the cake ;-)

What are your thoughts on a unit that has slightly lower cash flow and COC return, but solid IRR? (Principal pay down + cash flow / down payment )??

[Joe Villeneuve]

Originally posted by @Chris K.:

@Taylor L.

Hi, for me IRR was more the annual principal pay down plus annual cash flow divided by down payment giving me a higher percentage.... since my cash flow is only 50-100$ monthly , that's why my coc is lower.

But add in around 600-700$ monthly principal pay down it changes things....

If you are using your own cash to do the faster paydown, you are actually decreasing your IRR...and your cash flow...and, your cost.