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An investor purchases a small investment property for $300,000 with a $30,000 deposit. The property appreciates...

An investor purchases a small investment property for $300,000 with a $30,000 deposit. The property appreciates by 15% over 3 years of ownership. During that time the property generates an effective gross income of $7,000 in year 1,$6,000 in year 2 and $7,000 in year 3 with level operating expenses of $5,000 per year. The debt service payment is $1,500 per year. What is the cash-on-cash return for the investment?

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Expert Solution

Cash on Cash Return = Annual Cash Flow (Net Income) / Total Amount Invested

jeff jeffy answered 2 years ago
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