Real Estate Math
A South Dakota investor purchases a rental property for $150,000 with a $30,000 down payment. Annual net income is $18,000. What is the cash-on-cash return?
A12%
B60%✓ Correct
C18%
D6%
Explanation
Cash-on-cash return = Annual Net Income ÷ Cash Invested = $18,000 ÷ $30,000 = 0.60 = 60%. Using the values given ($150,000, $30,000), apply the appropriate formula.. The correct answer is 60%.. This is a common calculation on the South Dakota real estate exam.
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