Property Valuation
A Texas real estate investor analyzing 'cash-on-cash return' is measuring:
ATotal return including appreciation over 10 years
BAnnual pre-tax cash flow divided by the total cash invested (down payment + closing costs)✓ Correct
CThe property's cap rate
DNet operating income as a percent of gross income
Explanation
Cash-on-cash return = Annual Pre-Tax Cash Flow / Total Cash Invested. It measures the return on the actual cash the investor put in (down payment, closing costs, initial repairs), not the total property value. It is a useful quick measure for comparing investment properties but does not account for appreciation or tax benefits.
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