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 Stefano Mon Sep 16 2024 | 5 answers 1590
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? What is the cash-on-cash return on a $2000000 property with a down payment of $500,000 and $15000 of monthly rental income?

5 answers

HanRiverVisionaryWaveWatcher 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 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 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 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 Martina Wed Sep 18 2024
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