Real Estate Math
A Mississippi investor receives $1,800 per month net rent on a property purchased for $216,000. The annual cash-on-cash return (assuming no financing) is:
A8.33%
B10%✓ Correct
C12%
D9.17%
Explanation
Annual net income = $1,800 × 12 = $21,600. Cash-on-cash return = $21,600 ÷ $216,000 = 0.10 = 10%. Cash-on-cash return divides annual cash flow by the total cash invested (purchase price in an all-cash purchase).
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