Hi - a cash on cash return calculation question.
I have an agent presenting multi-family property and is attempting to factor in the principle reduction to the cash on cash return calculation. In other words, pre-tax cash flow plus principle reduction divided by investment. Is that common?
I have heard of that, but other than that fact I cannot give you much more info.
A fried of mine has a program for evaluating such properties.
Look for "Property Profile" at:
No. Cash on cash is typically just the first year's cash flow divided by the initial cash investment. What your colleague is doing is probably best in a return on equity computation. You might advise him to look at my software at http://www.proapod.com The software will make all these computations automatically.
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