if you invest $1,000,000 in a development, receive $500,000 from refinance at stabilization, and then $100,000 in distributions year after year, is your cash on cash return 20%, or 10%? I have seen instances where the $10,000 would be quoted as a 20% cash on cash return, but this seems misleading?
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Neither?
Your levered cash on cash in that situation is 2% assuming the 10K is after debt service
I meant $100,000, sorry. By your rationale, the CoC would be 20%? why?
Because you're implying that $500k from refi was a return OF capital. Therefore, you have $500k left in your capital account and if you're receiving 100k, that's a 20% return ON your money.
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