Is Cash on Cash and Cap Rate the same if using 100% equity?
Am I correct in my understanding. Essentially, I understand that Cash on Cash is basically the levered version of cap rate? If no leverage is applied, then your cap rate and cash on cash (Atleast for year 1 for a stabilized acquisition) should be the same, if not very close?
Correct in the sense of just thinking through the equation/math. Quick visual below with random numbers:
Cap Rate + (Cap Rate - Interest Rate) * Leverage Ratio = Cash on Cash
6% + (6% - 0%) * 0 = 6%
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