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  • Profile photo of Michael_CMichael_C
    Member
    @michael_c
    Join Date: 2004
    Post Count: 32
    December 30, 2004 - 12:23 pm

    Can i please get a further explanation regarding these figures as I came up with 8% and I am kind of wondering where I went wrong.

    Thank you

    Michael collins

    Profile photo of Michael_CMichael_C
    Member
    @michael_c
    Join Date: 2004
    Post Count: 32
    December 30, 2004 - 12:25 pm

    it would also be fantastic if someone could explain how concept of borrowing 50,000 from the vendor on 5 years finance could help with increasing the cash on cash return.

    Thank you

    Michael collins

    Profile photo of jopiejopie
    Member
    @jopie
    Join Date: 2004
    Post Count: 15
    January 6, 2005 - 5:50 pm

    Hey mate, this should clear it up for you.
    note the **Interest** calculation, ill bet this is where you made your mistake. its late now so ill explain your other question another time.

    INITIAL CASH DOWN
    Depost (30%) = (250000x.3) = 75000
    Closing costs = (250000x.05) = 12500
    Total Cash Needed = 87500

    CASH INFLOWS
    Rent = 33600

    CASH OUTFLOWS
    Outgoings (paid by tennant) = –
    Repairs (33600x.05) = 1680
    **Interest** ((250000-75000)x.08) = 14000
    Total Cash Outflows = 15680

    CASH ON CASH RETURN
    Cash inflows = 33600
    Cash outflows = 15680
    Net cashflow (33600-15680) = 17920
    Initial cash down = 87500

    Cash On Cash Return = 0.2048
    ((17920/87500)x100) = 20.48%

    Cheers.

    Jake

    Profile photo of Michael_CMichael_C
    Member
    @michael_c
    Join Date: 2004
    Post Count: 32
    January 11, 2005 - 5:30 am

    ahhhhhhhhh. That how it works. Alright thank you for the response.

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