Acquisition price: Cash in or total purchase price?

Hi Stessa Community.

I’m fairly new to Stessa and have a question regarding what to enter under Acquisition price.

It seems like there should be a separate cash in option and total purchase cost option. If I enter my cash in amount under acquisition price the return value is inflated. If I enter the total purchase cost then the COC metric is calculated lower.

Any solutions here?

Thank you,

Marcello

@ellochello Good question. Acquisition price should be the final contract price, before closing costs. If you also secured a loan for the property, that should be added separately as a mortgage.

The COC metric will net out acquisition price and original loan balance, and also take closing costs and some capex into account, when calculating the denominator (aka the “cash in” amount).

Closing costs can be added via the Transactions page and categorized as “Capital Expenses > Closing Costs,” if you’re going to capitalize them, or as regular expenses if they can be deducted in full in the year incurred. You may want to connect with a CPA if you’re not familiar with which closing costs fall into each bucket.

For more info on how cash on cash is calculated, see Understanding Your Cash on Cash Return.

To learn more about setting up mortgages, check out Mortgages & Loans: Add & Edit.

Finally, to update your acquisition price, see Basic Property Details: Add & Edit.

Hi @devin ,

I’m following up on this question/comment as I am running into the same issue and wanted to provide an example as this didn’t resolve it.

I use the BRRRR method so I am attempting to enter a property I purchased for $110k. I used $35k to rehab it and then refinanced it (now worth$185k) at $120k. If I enter the ‘Acquisition Price’ of what I purchased it($110k), it is listing my ‘Cash In’ amount to $110k and my COC metric is dramatically lower and my ‘Return’ is what it should be. To get my true ‘Cash In’ amount of $25k($145k originally invested-$120k mortgaged out), I have to enter that as my ‘Acquisition Price’. This provides an accurate COC, however it balloons my ‘Return’ to an absurd amount(I could only hope it was this high!).

Is this similar to what you are trying to reflect @ellochello?

Maybe this is a feature that needs to be added in? Either way, I’m a big fan of the site and hope this can be incorporated!

1 Like

@joaquinfvazquez I’m having a similar issue. We use a BRRR method as well. We just took a cash-out refi and the new “cash on cash return” is not accurate. For now I’m changing the purchase price to reflect the actual cash I still have in the property…however I’m with you and think this would be a great thing to add. @devin is there a way when you add a mortgage to a property if you can specify if it’s a cash our refi and then have that reflect on the “cash on cash” return?

Hi, same question @devin. Was there ever any clarity here?

@jeff1 @aaron.lapping Look here

devin explains how to input the new mortgage while leaving the original acquisition price, for the CoC calculation to be done correctly.

Full link here to understanding CoC calc by Stessa, including expanding a bit more on the above.