ROI & Cash Flow Calculations
I feel like I am taking crazy pills over here. I am trying to find a concise answer, but I keep finding answers that contradict each other. So, I hope this forum will help. I am super new to all this so thanks in advance.
QUESTIONS:
1. Does ROI include your mortgage (principle and interest) on a property that you finance?
2. Does Cash-on-Cash include your mortgage (principle and interest) on a property that you finance?
I realize that Cash-on-Cash is a type of ROI, but I am working off these assumptions:
Simple ROI = (rental income - vacancy - expenses) / (purchase price + closing costs + repairs/renovations)
Cash-on-Cash = (rental income - vacancy - expenses) / total amount of cash actually invested into the property
Basically, do you count mortgage (principle and interest) as an expense for both ROI and Cash-on-Cash?