Real Estate Math
An investor buys a Delaware property for $400,000 all cash. Annual NOI is $28,000. What is the cash-on-cash return?
A7%✓ Correct
B5%
C9%
D4%
Explanation
Cash-on-Cash Return = Annual NOI ÷ Total Cash Invested = $28,000 ÷ $400,000 = 0.07 = 7%. Since no debt is involved, cash-on-cash equals the cap rate in this all-cash scenario.
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