How to calculate Cash on Cash when primary becomes rental

2 Replies

I converted my primary home into a rental property. I am wondering how do I calculate the cash on cash return?  I made an initial down payment several years ago so would that be included?

Or would it just be the monthly mortgage amount included taxes and insurance?

You subtract the amount owing on the mortgage from the actual market value of the property. Your total equity in the property is your cash investment.

Cash on cash is only accurate for the first year since mortgage pay down and appreciation change annually.

Originally posted by @Thomas S. :

You subtract the amount owing on the mortgage from the actual market value of the property. Your total equity in the property is your cash investment.

Cash on cash is only accurate for the first year since mortgage pay down and appreciation change annually.

 I disagree, cash on cash is always relevant even if cash on equity diminishes. Cash on equity can reveal the opportunity cost of keeping a property, though. 

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