Cash-On-Cash: The real measure of rate of return

Cash-On-Cash: The real measure of rate of return

By Andy Friedman Real estate investors are always drawn to cap rate as their go-to measure for potential investments. Cap rates are flawed. (More about that in a previous post.) Your return is not the cap rate, it is the cash-on-cash return, especially since the...
Cap Rates: A Highly Misunderstood and Imperfect Metric

Cap Rates: A Highly Misunderstood and Imperfect Metric

By Andy Friedman   If I had a nickel for every time I’ve been told by a real estate investor that they will only consider a property with X cap rate or above, well, I’d have a boatload of nickels.  There are several problems with using cap rates as your main filter...
Liquidity: An Often-Ignored Component of Real Estate

Liquidity: An Often-Ignored Component of Real Estate

By Andy Friedman When most people evaluate a real estate investment, there is a small set of initial questions that they look to get answered: What is the cap rate? What is the vacancy rate? How are rents or lease rates trending in that area? What is the condition of...