For both examples, the property value is $350,000 with a $75,000 down payment. The variables are as follows:

• First example: annual appreciation = 1%, gross rent = $3,000 per month. rental appreciation = 1%
• Second example: annual appreciation = 6%, gross rent = $2,400 per month, rental appreciation = 3%

The PITI is the same (since the property value is the same,) so:

• First example: 1^st year gross rent ($32,400) MINUS PITI ($27,328) = net rent ($5,072)
• Second example: 1^st year gross rent ($25,920) MINUS PITI ($27,328) = net rent (-$1,408)

Five year returns are calculated by adding cumulative net rent to equity, so:

• First example: gross return = $202,734 (270.3% cash-on-cash) and net return = $65,350 (87.7% COC)
• Second example: gross return = $284,101 (378.8% COC) and net return = $134,275 (179.0 % COC)