Why are cash flow and equity accrual added together for the total return calculation?
Hi BP!
I'm currently referencing J Scott and Dave Meyer's buy and hold spreadsheet found here - https://www.biggerpockets.com/files/user/kayleebp/file/real-... while reading their real estate by the numbers book.
Overall it's been great, but I am stumped as to why they added the cash flow and the equity accrued together to get the total return figure. In the book, the authors mention that the tenant's cash flow can be used to pay down the mortgage payment aka "accruing equity". If that's the case, wouldn't adding the cash flow generated from the tenants + the equity accrued from the monthly mortgage payment be double counting since that cash flow is being used for the mortgage payment?
