Do you factor loan pay down in your cash on cash returns?

[Peter Milic]

I was calculating my cash on cash returns on a property I bought a few months ago. My cash flow is about a $1000 a month, and for the past 6 months $600 of my mortgage payment went toward the principal. Is my cash on cash return $1000 a month or $1600 a month? Thank you for your help!

[Andrew B.]

You can include it in separate analysis, but it is not included in CoCR because it is not a cash inflow it is still an outflow. it is also imaginary wealth, since equity can disappear in an instant if the market takes a downturn.

as a side note, I hope you are including all expenses when you say you have a return of $1000 a month....your profit is most definitely not simply the difference between rent and mortgage payment.