This Matters More Than Cash Flow (Most Rookies Ignore It) (Rookie Reply)
Summary
This BiggerPockets article discusses the importance of considering cash-on-cash return when evaluating investment properties, particularly in relation to down payments and self-management. It emphasizes the need to analyze the full financial picture, including potential costs of self-managing or hiring management and market dynamics. The article also provides insights on choosing a realtor and questions to ask.
Key Insights
- •Putting a larger down payment may generate more cash flow, but it may have a lower return on your money; consider your cash-on-cash return when deciding on your down payment amount.
- •When deciding on your down payment amount consider not only cash flow but the opportunity cost if you were to invest elsewhere.
Action Items
- ✓When looking for an agent, find one from BiggerPockets Agent Finder and ask them how many transactions they did the prior year and what percentage was with investors.Effort: lowImpact: medium
- ✓Understand what you need help on and find an agent who knows the market well.Effort: lowImpact: medium
Tools & Resources
- →BiggerPockets Agent Finder: Find an agent from the BiggerPockets Agent Finder.(biggerpockets.com/agent-finder)
Common Mistakes
- ⚠Don't box yourself in, if you want a lower down payment and a property manager, don’t look at the same places you have been looking because it is not working there.
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