If two properties are similar, the one which will produce the best first year return may be the better short term investment.
- Determine the Cash Flow After Taxes. In this case, we'll assume a CFAT of $11,000.
- What is the cash invested as down payment or other into acquiring the property? We'll use $170,000 in this example.
- Divide the CFAT by the cash invested:
$11,000 / $170,000 = .065 or 6.5% Return on Equity
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