Understanding CoC ROI

[Will Crayger]

Can anyone help me understand how the CoC ROI is being determined? I've tried to back into this calc every way google has instructed me to and have been failing to make sense of it.

Thank you in advance.

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[Barry Ruby]

@Will Crayger

Will,

COC (cash on cash) measures the return realized in a given year to the cash (equity) invested to earn it:

$100,000 annual cash flow / Equity = 10%

If the property is held for a period of years, the coc can be calculated by adding the total cash flows received over the holding period and dividing the total by the equity invested and dividing that amount by the number of years the property was held.

ROI (return on investment) measures the overall return realized (which includes all cash flow and cash proceeds) divided by the total capital invested in the property:

$1,000,000 cash flow and net sales proceeds/ $4,000,000 investment = 25%