For US farm, ranch and small business owners.

Airlines hedge fuel. Food companies hedge crops. For decades, protecting a business from outcomes it can't control took a broker, a trading desk and an order size most owners never had.

Kalshi opens hedging up to small businesses. Pick the outcome that would hurt you, like a fuel spike, a heat wave, a new tariff or a rate hike, and take a position on it, starting at a few dollars. If it happens, the payout offsets the hit. If it doesn't, the contract expires and the good month was the point.

A California goat herder and a Maryland tea company already do it, and CNBC, Reuters and The New York Times have covered businesses hedging on Kalshi.

Kalshi is a federally regulated exchange.

See how other owners hedge

Madusanka here from RE Riches.

No investor this week. One idea instead, because it sits under every rental listing you will ever read. A seller quotes you a cap rate. A lender quotes you a rate. Neither tells you what you will actually earn on your own cash, and below we run one made-up duplex through both so you can see the gap. Every number is an illustration, not a real deal and not a real investor's result.

✔️ What a cap rate measures — and the three things it leaves out on purpose

✔️ One duplex, two numbers — a 6.3% cap rate and a 1.1% cash-on-cash return, with every line shown

✔️ Why the loan can matter more than the price — the same building at 7%, 6% and 5%

✔️ A two-number test you can run on any listing this week

Meet the cap rate and the cash-on-cash return.

Same building,

Same rents,

Same bills…

And two honest numbers that point in very different directions.

An illustration. Made-up numbers, not a real deal.

A duplex for $300,000,

Two units at $1,300 a month each, so $31,200 a year,

Less 5% vacancy, leaving $29,640 actually collected.

Then the bills the building runs on:

$3,600 property tax,

$1,200 insurance,

$2,400 repairs,

$1,200 water and trash,

$2,371 management at 8% of rent collected.

Total operating costs: $10,771.

What's left is the net operating income, or NOI: $18,869.

Cap rate = NOI ÷ price = $18,869 ÷ $300,000 = 6.3%.

That's the seller's number. Notice what isn't in it: your loan, your closing costs, your repairs on day one.

So now add you:

25% down is $75,000,

$6,000 in closing costs (we assumed 2%),

$4,000 of work before the first tenant,

For $85,000 of your own cash.

The loan is $225,000, 30 years, and for this example we assumed 7%, so about $17,963 a year in payments.

$18,869 − $17,963 = $906 of cash flow.

Cash-on-cash = $906 ÷ $85,000 = 1.1%.

Same duplex. 6.3% or 1.1%, depending on who is asking and what they count.

And the loan is doing the damage, because we only changed the rate:

Three moves turn a listing into a decision, and none needs a spreadsheet beyond one afternoon.

So which number is right?

Both,

They answer different questions:

The cap rate compares buildings, because it ignores how you pay for them,

The cash-on-cash measures your cash, because it counts exactly how you paid.

And each one leaves something out.

The cap rate ignores financing,

The cash-on-cash ignores the principal you pay down, any change in value, and your tax position.

Neither one measures risk, location, or what the roof costs in year six.

A two-number test doesn't tell you to buy,

It tells you what to ask next.

LESSON #1: A CAP RATE IS ONLY AS HONEST AS ITS EXPENSES

Same rent, same price,

Drop the vacancy, the management and the repairs,

And the cap rate climbs without the building changing at all.

Rebuild the expenses before you trust the percentage.

LESSON #2: THE LOAN CAN MOVE YOUR RETURN MORE THAN THE PRICE

$300,000 never changed,

The rate moved from 7% to 5%,

And cash-on-cash went from 1.1% to 5.1%.

Get real quotes before you fall in love with a cap rate.

LESSON #3: COUNT ALL THE CASH YOU PUT IN

Down payment is only the start,

Closing costs and day-one repairs are your money too,

Leave them out and the return looks better than it is.

Divide by everything you wrote a check for.

LESSON #4: NO SINGLE NUMBER IS A GOOD DEAL

Cap rate ignores your loan,

Cash-on-cash ignores your paydown, value and taxes,

And neither sees risk.

Use them to ask better questions, not to get a yes.

The arithmetic here is small, it is public, and it is the same whether the building is a $300,000 duplex or a $3 million park. Run it on the next listing you read.

How Did You Find Today's Edition?

So here's this week's question, and I want your real numbers, not mine.

Find one rental listing near you and hit reply with its asking price, monthly rent, annual property tax and insurance. You don't have to name the property.

I'll run the cap rate and cash-on-cash on a few and show the working in a future edition, but only if you tell me I can use yours, and without your name.

To your clear-eyed success ahead,
— Madusanka, RE Riches

RE Riches is educational and informational only. It is not financial advice, it does not sell investments, and nothing in it is a prediction. Real estate carries risk, including the loss of the money you put in. The duplex in this edition is an illustration with made-up figures; it is not a real property, a real investor or a real result, and the loan rates are assumptions for the example, not quotes. Get your own figures and speak to a qualified professional before you invest.