All Forum Posts by: Patrick Schoeben

Thanks for that explanation Will!

Your response led me to Googling the difference between NWROI (Net Worth Return on Investment) and Cash on cash and it yielded the following distinction: 

"Cash on cash return measures how much cash an investment property will actually generate, whereas ROI measures total wealth buildup"

So my takeaway is maintaining a positive cash on cash return over prioritizing concern for ROI in order to accrue enough funds to put a down payment on a non-FHA loan for the second property

Hi all, I am a recent Entrepreneurship graduate from Illinois State University currently studying for my Real Estate License after completing the holy grail that is Rich Dad Poor Dad! After finding my way to the Bigger Pockets Podcast and just today completing Craig Curelop’s phenomenal read, “The House Hacking Strategy,” I was left with a question regarding NWROI and Equity.

I plan to soon purchase a multi-family property (duplex) with a FHA loan and live in it for a single year. I would love to quickly purchase another duplex with another FHA loan after refinancing.

My understanding is that a 3.5% down payment would lower my initial equity, while increasing my NWROI. Whereas a higher down payment would increase initial equity, but decrease my NWROI.

In order to attain 20% equity to refinance into a conventional loan by the end of the first year, should NWROI be a large concern for me? Should I consider the larger down payment? Are there any other advisable methods or a happy medium to attain a viable NWROI while still achieving the equity I need?

I may be missing a critical piece here, but all responses are greatly appreciated!

Thanks,

Patrick