How do you determine Cash on Cash ROI?

[Seth Mosley]

I know how i do it, just interested to know how alot of you come to your percentage on here.

I see some pretty high percentages, and wonder if you guys are factoring in the same numbers as I am in my equations (rent minus repairs / piti / vacancy/turnover / capital expenses / property management / lawncare/maintenance)

Interested to see responses..

Thanks and happy new year!

[Joe Villeneuve]

Cash on cash return means exactly what the words mean...within the first year.  It isn't that complex.  It's a percentage of how much CASH you got back related to how much CASH you put in.

If I buy a property worth $100,000, for $80,000, with 20% down ($16,000) and I finance the rest ($60,000), I'm putting $16,000 in CASH in.

If within the first year, with the same house, I get $300/month NCF back, or $3600 in that first year, my CCR is $3600/$16,000 = 22.5%.

If, added to this, I rent a parking space for $25/month, and I have no expenses to offset this CASH income, my CASH income is now $3900/month...so my CCR is:
$3900/$16,000 = 24.375%.

If, during the year I have to pay cash for a furnace ($1000), my CASH income in that 1st year is now $2900, so the CCR is: $2900/$16000 = 18.125%

If, I paid the full AP of $80,000 in CASH, got the $3600/yr in NCF, and I refinanced and got all of my CASH I used to buy the property back, my CASH coming back would be $83,600 so my CCR would be: $83,600/$80,000 = 104.5%...as in I got all of my money back, plus an additional 4.5%