Cap rate= 8% Cash on cash return= 24% Initial investment= $34,000
Shevy Akason and Associates Principles:
1) Cap rate of 8%+ using todays numbers, and not less than 5.5% using worst case scenarios 2) We use 5% vacancy as todays baseline, and 10% vacancy to calculate worst case scenario 3) We use todays rental numbers to calculate expected rent and account for rental deprecation of 12.5% to account for worst case scenario 4) We use an interest rate of 5% for those that are buying as a primary residence and 6.5% for investors 5) We account for lost income in downpayment of 2% 6) We Calculate 1%/year of the purchase price for maintenance reserves
