ROI & Cash Flow Calculations

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I feel like I am taking crazy pills over here.  I am trying to find a concise answer, but I keep finding answers that contradict each other.  So, I hope this forum will help.  I am super new to all this so thanks in advance. 


1. Does ROI include your mortgage (principle and interest) on a property that you finance? 

2. Does Cash-on-Cash include your mortgage (principle and interest) on a property that you finance?

I realize that Cash-on-Cash is a type of ROI, but I am working off these assumptions:

Simple ROI = (rental income - vacancy - expenses) / (purchase price + closing costs + repairs/renovations)

Cash-on-Cash = (rental income - vacancy - expenses) / total amount of cash actually invested into the property

Basically, do you count mortgage (principle and interest) as an expense for both ROI and Cash-on-Cash?

Yes, at the very least the interest is an absolute expense. I don't consider the principal paydown as cash-on-cash ROI because...where's the cash? It's unrealized gains until you sell the place.

Definatly do not include principal pay down in your ROI, except when bragging to friends, since it can vanish in a blink. Most investors over inflate their profits regularly. For myself if it is not cash in hand it does not exist.

Reality is that a investor will never know the true ROI until the day they sell a property which many long term investors will never achieve.