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5/3/2016 4 Comments

Is there a LTV - COC Sweet Spot?

It may seem logical that the greater the leverage, the greater the cash on cash (COC) return.  And you would be right.  But it is not linear.  A leverage increases, COC increases at at a steepening rate.
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As this chart shows, the COC return increases at an increasing rate, in excess of the increasing leverage rate.  The greatest jump in COC between 70% and 80% LTV.

Similar results are obtained if the interest rate increases with the leverage.

There you have it - proof of the power of leverage.
4 Comments
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12/16/2016 06:25:16 am

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    About

    Hi!  I'm Christine Kwasny. 

    Fall Line is my small but growing investment real estate business. 

    My triumphs and pitfalls are shared here so that others may learn as I have learned from others.

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    Why Fall Line?

    Fall Line sums up what we live for - skiing and mountain biking.  The goal is to maximize our ability to follow our bliss through work that is personally and financially rewarding.  So far, so good!