Part 4/8:
Cash on Cash Return measures the net cash flow generated from the property relative to the total cash invested. Sean aims for a cash on cash return of over 10%. This figure accounts for all costs associated with the property, including financing costs, taxes, and management fees.
Sean notes that while paying for properties in cash may lower the cash on cash return, it stabilizes cash flow by eliminating mortgage obligations.
Case Study: Analyzing a Property
Sean walks viewers through an actual property analysis exercise using a Cincinnati listing priced at $185,000. He notes key attributes, such as the property’s recent sale price and size, to gauge initial viability.