Including Improvements Expense in Cash-on-Cash Return?

[Corey G.]

Hello!  I'm new to BiggerPockets, but have read some thoughtful posts from members in the past several months.  I hope you'll pardon and indulge me in a rather trivial question I have not managed to determine an answer to elsewhere.

I'm curious about how others approach the calculation for cash-on-cash returns.  We have an apartment in one of our buildings which we have renovated in the past month.  Do you typically include or exclude the associated expenses when calculating the cash-on-cash return?  I ask because these one-time expenses are capitalized and depreciated and somewhat distort the cash-on-cash return for the year in which they are incurred.

Thank you in advance for sharing your general approach!