Calculating Return with Unique Financing

[David Light]

I'm evaluating a single family property and would like some input on how best to calculate my return. I am able to leverage private financing and have negotiated 10% down with cash flow from the property going to the lender until equity reaches 20%. The loan amount will be 80% of the purchase price officially, 10% will essentially be a 0% loan, and 10% is my down payment. The private money is family which is the only way I'm getting this deal.

When calculating my return I'm debating using the 20% or 10% as the cash I'll have invested. For example, if the house is 100k I'll actually only put down 10K out of my bank account up front but put in another 10K from cash flow that would have gone to my bank account. For that reason I'm thinking I should evaluate the deal using 20K as my out of pocket cash investment. Am I thinking about this wrong?

I'm looking at cash on cash return and obviously if I have 10K as my investment the numbers are much better than if I use 20K. Any help is appreciated.