When determining ROI, what is considered the 'Initial Cash Investment'?

The 'Initial Cash Investment' is understood to encompass all the funds that an investor initially allocates to acquire a property. This includes not only the down payment but also any additional costs directly associated with the purchase, such as closing costs.

The total cost of the property reflects the complete financial commitment incurred by the investor, ensuring that all expenditures related to securing ownership are accounted for. By considering the total cost as the initial cash investment, a more accurate calculation of Return on Investment (ROI) can be conducted, as it provides a holistic view of the money being put at risk.

In contrast, focusing solely on the down payment or excluding certain purchase-related expenses would underrepresent the initial financial exposure the investor faces. This could lead to misleading ROI calculations, as subsequent income generated by the property would be measured against an inaccurately low initial investment. Therefore, recognizing the total cost of the property as the 'Initial Cash Investment' ensures a clearer assessment of investment performance.