Initial Investment
The cash you put into the deal to acquire and stabilize the property
Initial investment is the total cash an investor contributes at the start of a real estate purchase to acquire and stabilize the property. It represents the full upfront capital required to close the transaction and position the property to operate according to the investment plan. Initial investment is broader than a down payment and should reflect the real cash required to get the asset to “day-one readiness.”
Initial Investment ($) = Down Payment + Closing Costs + Upfront Repairs/Improvements + Any Upfront Reserves and Start-Up Costs
Initial investment commonly includes the down payment, closing costs, and immediate repairs or improvements needed to make the property rentable. Depending on the property and strategy, it may also include reserves, initial marketing and leasing costs, utility setup costs, and other start-up expenses required to stabilize operations.
Investors track initial investment because it directly impacts return calculations and decision-making. Metrics like cash-on-cash return depend on it, and comparisons across deals are only meaningful if the initial investment number is complete and consistent. When initial investment is measured accurately, the financial story of the deal becomes clearer—how much cash it takes to start, what the property returns, and whether the opportunity is truly worth the capital.