Cash on cash metric

I would love to see a metric for Cash on Cash.

19 Likes

@kevin.n.hendrickson - Yes, we intend to add this metric to the dashboard but have some work to do first around tracking cash in to get the correct denominator for each calculation.

How do you figure your cash in number for the denominator? Is it simply acquisition price + closing costs + initial capex, less net debt proceeds?

If others would also like to see a cash on cash metric added, please click the heart on Kevin’s original post to register your vote. If you have specific thoughts on how the calculation should work, just add your reply here.

1 Like

Yes, downpayment + closing costs and any other costs that went into buying the property. I use this for the calculations

Agree with Kevin as well:

Down Payment + Closing Costs + initial Capital Expense to get the property to market or stable. This sum would be the Investment for ROI or CCR. However, overtime, if leveraged with debt, the CCR would become obsolete and you’ll want to look at ROE (Return on Equity). I think Stessa would stand out if they can display CCR vs ROE. Let me know if you’d like to discuss further.

5 Likes

Totally agree with the CCR and ROE, both are important to track.

Would love to see cash on cash ROI as well as cash on cash ROI with principal paydown. This is one of the most important metrics for an investor in tracking overall profitabiltiy of investment.

1 Like

@krathman @matthew.kurkowski @jason.s.fung @kevin.n.hendrickson
Thanks for everyone’s input. We’re working on this internally and are currently defining the denominator for the CoC metric as follows:

Acquisition Price
(+) Closing Costs
(+) Loan Costs
(-) Loan Proceeds
(+) Any Cash Flow Shortfalls Prior to Placed in Service Date (due to capex, mortgage, etc.)
= Cash In

For this first iteration, we do not plan to adjust the “Cash In” calculation for any cash flow shortfalls that occur after the Placed in Service Date, regardless of reason.

Does this approach line up with how you typically calculate the denominator for CoC?

We’ll tackle the numerator and then define “equity” a bit later…

2 Likes

Yes, this lines up perfectly with how we currently calc our denominator for COC return. Thanks for getting this into the tool, we really appreciate it!

Devin,

I’d ensure the down payment is included, possibly falls under “Cash Flow Shortfalls”. The terms look correct to me based on the definition given. Biggest thing is to include the capital expenditures to get the property up and running (if applicable).

COC & ROE are my two most important metrics I track.

Good news! We’ve just launched the new Cash-on-Cash metric for all Stessa dashboards. Thanks to everyone on this thread for your great suggestions.

For this initial feature release, you’ll now see your annualized cash-on-cash return for the most recent full calendar month. Also noted is your total “cash in” amount, which is used as the denominator in the return calculations.

Click “View Monthly Cash on Cash” to show a 12-month historical plot of each month’s cash on cash return. Hover your cursor over any particular data point on the chart to see the actual percentage.

We’re working on further improvements, including adding a trailing 12-month average return figure.

Finally, we also hope to add Return on Equity as a companion metric in the near future.

@jrvoncannon @jason.s.fung @krathman @matthew.kurkowski @kevin.n.hendrickson

3 Likes

Thanks! Having trailing 12-month average as well as total lifetime average (i.e. if you’ve owned property for 2 years, have the trailing total 2 year CoC) both on the 12 month chart would be great as well. Thanks for adding this feature.

Thanks Devin, both CCR and ROE are valuable metrics to me as well. I like this hack at the CCR, if I have more ideas I’ll send them your way. Enjoying the platform/service. …now for that Android App :slight_smile: