I couldn't get my head around Italian Investment

[Fabio Busatto]

Example (Buy & Hold):

Purchase price: € 150.000,00

Downpayment: € 35.000,00

Additional cost for buying: € 25.188,00 (legal, tax, agency fee, cleaning, mortgage fee)

Renovation cost: € 10.000,00

Monthly Mortgage Payment (PI): € 487,34 (annual interest € 2.267,28, annual principal € 3.581,91)

Tax on income: flat 21%

Total annual operating income: € 16.111,20

Total annual operating expense: € 6.060,00

Question:

How do you calculate cash on cash return (ROI)?

#ip1 (Income-Expense-Monthly mortgage payment)+annual principal/(Downpayment+addition cost for buying+renovation)

#ip2 (Income-Expense-Monthly mortgage payment)+annual principal/(Downpayment+(addition cost for buying+renovation/amortization of assets))

Note:

1)assuming additional cost for buying+renovation will be amortize over a period of time?*

2)I make investments as a person and not as a legal entity