7/30/2023 0 Comments Unit calculator coc![]() We used a rough estimate based on our experience. Instead, we just factor it into our decision of whether or not to put in an offer on this deal. However, for the purposes of this initial COC calculation, we didn’t go through the effort to figure out the likely increase. ![]() We knew property taxes would likely go up after purchase (because the new purchase price would affect the assessed value of the property). We looked up current property taxes by going to the Yakima County website. In this case, we had recent conversations with our commercial loan broker so we knew that we could get a loan with roughly the following terms: 25% down, 4.5%, 30 years amortization, 12 monthly payments per year. Over time, you get better at the process and your initial estimates will become more accurate. So, you have to do your best coming up with good estimates with imperfect information. The reality is, often you aren’t going to get accurate information before putting in an offer. Note that at this stage, we didn’t have accurate information for every single variable. Let’s start by examining what the COC calculator has to say prior to us putting in our offer. Ten of the units are studios and six are one-bedroom apartments. This property is a 16 unit in Yakima, WA listed for $1.2 million. So it’s a good learning experience all the way around! You’ll also get a good sense of how we approach buying a new property. Through the course of doing the cash-on-cash calculations, you’ll be able to see our reasoning for walking away in the end. The following is actually a property that Kenji and I put an offer in, locked-up and then ended up walking away from in Yakima, WA late last year. Once you’ve finished digesting this series, you can also feel free to run some calculations and post them in our general Semi-Retired Facebook physician, professional, dentist and lawyer groups, so you can have other investors (and maybe even us!) take a look at it and give you feedback. In the meantime, download our COC calculator and start running through lots of properties on Redfin and Trulia to hone your skills. It is currently only offered twice a year, but you can get on the waitlist here. If you want to become an expert in tackling more complicated cash-on-cash scenarios, consider signing up for our online course, Zero to Freedom Through Cashflowing Rentals. Now, we’re going to be a relatively simple example deal, not one filled with a ton of hidden value or containing any real complexities. In Part 1 and Part 2 of this series, you learned why it’s important to use a cash-on-cash (COC) calculator and you took a deep dive into the variables included in the calculator so you could learn how to evaluate deals.įinally, in this post, we get to the fun part: doing an example deal. ![]() In this final installation, we cover an example property that we considered buying in late 2019 and explore the deal using the COC calculator. It also explains where each component of the calculator should be sourced. Summary: Do you know how to use a cash-on-cash (COC) calculator to decide if you should purchase a property? Do you know what values to include and where to find them? This three-part series covers why a COC calculator is a vital tool in any real estate investor’s toolbox. ![]()
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