Evaluating Deals with Equity Gain

I use Cash on Cash return as outlined by Steve to evaluate deals with potential and I include instant equity gain.  For example below is a deal from another Country that I recently looked at and came up with the following return…

Annual net cash flow     $8,459
Instant equity              $40,000
Total annual gain         $48,459
Net cash needed          $59,026
Cash on Cash Return    82.10% (Total annual gain/Net cash needed)

The reason I evaluate like this is it allows me to compare with another deal that may have instant capital gain or even a capital loss.  The issue though is that the instant capital gain cannot be realised until I redraw at least 6 months later, and when I do I will pay interest which will intern put up the repayments unless otherwise put into an offset account.  If the instant capital gains were not taken into account when evaluating the deal the Cash on Cash Return would be 14.33%.

Should capital gains be taken into account when evaluating this deal?

What are others opinions?