WTBNowMember@wtbnowJoin Date: 2004Post Count: 24
Can someone pls clarify how to correctly calculate the COC and the total IP loan costs when using equity in another mortgaged property.
E.g. 20% deposit and closing costs are funded from equity. This would result in an ‘infinite’ COC as no cash was outlaid. Or do I calculate the loan costs on 80% of the purchase price and use the 20% deposit and closing costs to calculate the COC?
Thank you for yur help.
WTBTerrywParticipant@terrywJoin Date: 2001Post Count: 16,190
You could do it either way. COC is just a measurement used to compare different investment strategies. Infinity is nto real meaningful, so I would calculate it as if using 20% cash deposits. You could be using these deposits elsewhere, so that is what you want to compare.
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