CASH ON CASH RETURN QUESTION

[Christian Schultze]

Hey guys i was just doing some studying and I have a question about CCR . So say i put 20,000 down on a house thats 200,000 and end up selling it for 240,000 . IS THE "ROI" 20% ? And WHAT WOULD THE CCR BE , just a little confused with the concepts at the moment and would love some clarification -THANKS:)

[Joe Villeneuve]

CCR can be used for anything. It is a percentage over the course of the first year, of the relationship of how much CASH you put in to how much CASH you get back. There is nothing in the analysis except CASH...hence the name Cash on Cash Return.

Example1:

If you put $20k into a deal (cash), and between positive cash flow, or any other "return" of CASH you get during that first year (ONLY), you got a return of $10k, your CoCR would be 50%

Example2:

If you put $20k into a deal (cash), and flipped it for a profit of $20k (this means you got your original $20k back too), your actual CoCR would be 200%

Example 3:

If you put $20k into a deal (cash), and flipped 3 times within a year it for a profit of $20k (this means you got your original $20k back from the first 2 flips, so you are using your same $20k 3 times), your cumulative CoCR would be 400% (original $20k, plus 3 - $20k profits).