Real Estate Math

A Missouri rental property is purchased for $165,000. Annual rental income is $18,000 and expenses are $7,200. What is the cash-on-cash return if the investor put $33,000 down?

A6.5%
B9.3%
C32.7%✓ Correct
D18.2%

Explanation

NOI = $18,000 − $7,200 = $10,800. Cash-on-cash return = $10,800 ÷ $33,000 = 32.

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