+1 vote
asked Dec 16, 2017

+1 vote
Good morning and thank you for writing. Recovering the funds is also called a "cash on cash" return on investment. That is, how long does it take for your investment to return your upfront costs? You are in luck, because we just published a guide about this.
Here is what it says about your topic:

Some investors like to look at "cash on cash," which tells you what the return is on your initial investment. For instance, if you buy a \$200,000 property with \$40,000 down and \$5,000 in closing costs, what is the return on your investment if you get \$1,200 a month in rent?

Calculation:
Upfront costs: \$45,000
Annual Rent: \$14,400
Insurance: (1,200)
Taxes (\$2,400)
Mgt Fees (\$1,440)
Vacancy (\$2,880)
Operating Income \$6,480

Cash on Cash: 14.40%
(Annual Income / Upfront Expenses)

In this case, it's 14.4 percent, a good number. And because the calculation is pretty simple, it allows you to compare properties easily.

There are several other examples in the article about different ways to compare property.
answered Dec 18, 2017 by (47,650 points)
edited Dec 18, 2017