Hi Guys,
Have a question regarding Cash on Cash Return. Have been googling on other websites, but can't find it anywhere, hence.....the not so bright question:
Is it true in thinking that you cannot calculate a COCR for a property unless it is cashflow positive?
My reasoning is:
1. For the cash part, you take on board the total rent minus all outgoings (including mortgage), so if it aint positive, there is no use doing it.
I also realise the following:
1. It should really be calculated for first year only of investment, as it doesn't take into account any asset appreciation
2. It is to be calculated before depreciation
3. It is to be calculated before tax
Negative COCR are for negatively geared properties, but who wants to see this as a %???
Cheers,
F
Have a question regarding Cash on Cash Return. Have been googling on other websites, but can't find it anywhere, hence.....the not so bright question:
Is it true in thinking that you cannot calculate a COCR for a property unless it is cashflow positive?
My reasoning is:
1. For the cash part, you take on board the total rent minus all outgoings (including mortgage), so if it aint positive, there is no use doing it.
I also realise the following:
1. It should really be calculated for first year only of investment, as it doesn't take into account any asset appreciation
2. It is to be calculated before depreciation
3. It is to be calculated before tax
Negative COCR are for negatively geared properties, but who wants to see this as a %???
Cheers,
F
