Cryptocurrency Q&A
What is the cash-on-cash return on a $2000000 property with a down payment of $500,000 and $15000 of monthly rental income?
What is the cash-on-cash return on a $2000000 property with a down payment of $500,000 and $15000 of monthly rental income?
Stefano
Mon Sep 16 2024
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5 answers
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Could you please clarify for me the calculation method for determining the cash-on-cash return for a property investment? Specifically, if I invest $500,000 as a down payment on a $2 million property that generates $15,000 in monthly rental income, how do I compute the cash-on-cash return? Is it a straightforward formula involving dividing the annual net cash Flow by the initial cash investment? And how does one ensure accurate accounting for expenses and potential fluctuations in rental income?
5 answers
HanRiverVisionaryWaveWatcher
Wed Sep 18 2024
To evaluate the potential returns, one must first ascertain the annual rental income generated by the property. Given the monthly rental income of $15,000, multiplying this by 12 months yields an annual income of $180,000.
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Stefano
Wed Sep 18 2024
Next, it's essential to calculate the cash-on-cash return, a key indicator of investment efficiency. This metric is derived by dividing the annual cash Flow by the initial cash investment.
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GyeongjuGloryDaysFestival
Wed Sep 18 2024
Applying this formula to our scenario, ($180,000 annual income / $500,000 initial investment) * 100%, results in a cash-on-cash return of 36%. This high percentage suggests a significant and attractive return on the investor's capital.
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KDramaLegendary
Wed Sep 18 2024
In assessing the profitability of a real estate investment, it's crucial to analyze key financial metrics. For instance, consider a property purchased for $2,000,000 with an initial down payment of $500,000.
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Martina
Wed Sep 18 2024
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