A Definitive Guide to Understanding Cap Rates and Cash-on-Cash Returns

There are several means of determining the return on an investment property.

You may hear the term “ROI” (or “ROR”), which means “Return on Investment” (or “Rate of Return”), which can be calculated in all sorts of ways.

Unfortunately, a lot of people will determine this number based on whatever factors will yield the highest number, regardless of how accurate to real-life it might be.

ROI is very general and encompasses your overall return on investment and it includes a lot of estimates and unproven numbers.

via A Definitive Guide to Understanding Cap Rates and Cash-on-Cash Returns.

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