Hello all, my question relates to the percentage returns quoted by agents.The calculation of rent times 52 weeks divided by the purchase price x 100 to give you a figure is the so called yeild right?? Then there is Steve Mc knights cash on cash return percentage figure which takes into account all expenses related to the property. People in here are talking about finding 8 percent yield which iam sure we can all do with ease, but 8 percent cash on cash return seems a little more unrealistic to me, can anyone help me with this please.
Mark,
I think you’ll find people assess these things differently. Steve’s CoCR is also about how much you put into the deal… so it has an implicit notion of deposit.
I just work out returns on a gross % basis- based on price of property and rental return. Certainly net return can be less- perhaps 2 percentage points… but then this can be made up with depreciation. So it evens itself out again.
Have you had a look at Jaffasoft’s calculator? You can find it on this Forum.
CoCR can be higher than gross yield. Often, people suggest a 20% deposit… so when you are calculating CoCR, and a property might be 100k, for example, you are thinking about yield on the 80k that is not your money, rather than the 100k if you don’t take into account deposit.
kay henry
Thanks Kay,
yeah i find the calculator a great tool but seem to get bogged down trying to achieve a good coCH return which is almost impossible, i am trying to generate some passive income but this seems hard, can you briefly outline the depreciation issues for me please,
Thanks MarkMark,
There’s a fellow on here called “depreciator”. He runs a depreciation company, and he knows all there is to know- so *poke* depreciator- ahem- you’re needed!
The first thing I think about with depreciation is depreciating the cost of the building… and that applies to 1985 properties- other than that, you can depreciate the usual items. Or, you can claim on earlier buildings if there’s been renovations. Dunno- it’s too complex for me
SCOTTTTT!kay henry
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