Friday, Jul 24, 2026 The claims desk. Receipts included. POWERED BY LENZ ↗
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FINANCE

The Claim

A $250,000 duplex with a $50,000 down payment, $2,000 monthly rent, and $5,000 annual expenses produces approximately a 7.2% capitalization rate and, after financing at 6.5% interest, a cash-on-cash return of 10–13%.

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The Short Version

The claim's own numbers contradict its conclusions. Standard formulas applied to the stated inputs ($24,000 rent minus $5,000 expenses = $19,000 NOI) yield a 7.6% cap rate — close to but not 7.2% — and a cash-on-cash return of roughly 7.7%, far below the claimed 10–13%. Reaching 10–13% would require materially different inputs such as a much smaller down payment or significantly higher rent. The cash-on-cash figure is substantially overstated and could mislead prospective investors.

Caveats

  • The cash-on-cash return calculated from the claim's exact inputs ($200,000 loan at 6.5% for 30 years ≈ $1,264/month debt service) is approximately 7.7%, not 10–13% — a significant overstatement that could mislead investment decisions.
  • The cap rate from the stated figures is 7.6% ($19,000 ÷ $250,000), not 7.2%; no vacancy rate or other adjustment is specified in the claim to justify the lower figure.
  • Supporting examples cited for the 10–13% range use materially different assumptions (e.g., a $15,000 down payment instead of $50,000), making them inapplicable to the scenario described.

The Receipts

  1. The role of cap rates in real estate - J.P. Morgan

    J.P. Morgan

  2. Return metrics explained: Cash-on-cash return in real estate investing | Our Insights

    Our Insights

  3. How to calculate capitalization rates in real estate - Yardi

    Yardi

  4. Cash-on-Cash Return (COCR) in Real Estate | Chase - J.P. Morgan

    Chase - J.P. Morgan

  5. Cash on Cash Return | Formula + Calculator - Wall Street Prep

    Wall Street Prep

  6. Real Estate Investing for Passive Income: The Complete Beginner Guide | Finverse

    Finverse

  7. Cap Rate Calculator: What's a Good Cap Rate for You? - Clever Real Estate

    Clever Real Estate

  8. Cap Rate Formula: How to Calculate Cap Rate (With Examples) - Landlord Studio

    Landlord Studio

  9. Cash-on-Cash Return vs Cap Rate for Your Rental Property Investment - Landlord Studio

    Landlord Studio

  10. Cash-on-Cash Returns in Industrial Real Estate

    industrialproperty.loan

+ 6 more sources — see the full list on Lenz

Filed Under

duplex