While the Cap Rate calculation is the similar to the Cash-on-Cash calculation, you do not consider your buy-in. Instead of the initial investment, you consider the market value. Cap rate is a market-driven metric, measuring the attitude and behavior of the market. The Cap Rate is very helpful when comparing similar investment properties that you are interested in purchasing. Since it is financing agnostic, the cap rate measures an investment relative to the market, not your own personal financing capabilities. This allows for an at-a-glance comparison between properties, as well as monitoring a property over time. To calculate the cap rate, you would divide the net operating income by the market value.
Continue reading “MogulMind’s Data Points: Cap Rates (Part 3 of 4)”
CoC is used to determine the amount of profit you will make (yearly) based on the amount of cash you have invested in the property (not the amount borrowed). This is an important distinction (cash invested vs borrowed) as you are likely to be financing your properties, regardless of the investment type (flip, rental, etc).
Cash-on-Cash compares your net income to your initial investment.
Continue reading “MogulMind’s Data Points: Cash-on-Cash Return (Part 2 of 4)”
Greetings, and welcome to the first of a four part series. We get a lot of questions about the sources of our data, and how the calculations are made. These four posts hope to clear up the confusion, once and for all.
Continue reading “How MogulMind Gets Its Data & Why You Need It (Part 1 of 4)”