Cash-on-Cash Return - include rehab cost or not

[Gary Michalske]

I just noticed a disagreement between @J Scott SFH_Rental_Analysis and @Brandon Turner Four Square method for calculating the cash-on-cash return. It may just be me overlooking something but J Scott doesn’t include the cost of the rehab in the calculation where Brandon does. Unless the rehab cost will be included in the loan I feel it should be included in the calculation. I really want to understand how this is supposed to be calculated so I do it properly when analyzing properties. Anyone have any insight?

[Gary Michalske]

Thank you @Christopher Phillips. That's what I was thinking as well. Unless you are able to secure one of those loans that include the rehab cost the cost should be included in the COC calculation like @Brandon Turner does in his Four Square Method.  I just wonder if J Scott overlooked this when he built the tool or if he had a definite reason for not including it.