Investing in rental properties can be a lucrative way to generate passive income and build wealth over time. However, understanding the potential return on investment is crucial before committing to any property purchase. One of the most commonly used formulas to assess profitability is the calculate cash on cash return. This guide explains how it works and why it is an essential tool for rental planning. A cash on cash return measures the annual pre-tax cash flow from an investment property relative to the amount of cash invested. This metric helps property investors determine whether or not a rental property aligns with their financial goals. It’s particularly helpful for investments financed through loans, as it focuses solely on the cash invested and not the total property cost. He...
Read More