Cash on Cash Calculation v. ROI is **CONFUSING!!**

[Selina Giarla]

I have spent hours looking online (including on here) at the CoC calculation as well as the ROI calc. Here is my understanding

1. Cash on Cash Return=  

Annual (before tax) Cash Flow / Total Investment

Question: Does the Annual (before tax) Cash Flow include: Real estate taxes, insurance, vacancy factor, capex contribution, annual leasing fees, R&M factor, and debt service? These are aside from the standard expenses such as mgmt fees, utilities, HOA, landscaping/snow.

Question: Does Total Investment include: Down payment, closing costs (including escrow funding?), and legal fees to close?

I can't imagine not doing a calculation that doesn't factor real estate taxes, or debt service (mortgage pmts) so if CoC isn't the correct calculation please let me know. My strategy is receive monthly income, and hold long term if that changes anything.