Annual pre-tax cash flow divided by the actual cash you invested.
Unlike cap rate, cash-on-cash accounts for your loan. It answers the question investors actually ask: what return am I earning on the money I personally put in?
Formula: CoC = Annual Cash Flow ÷ Cash Invested × 100
Example: $9,600 annual cash flow on $85,000 invested = 11.3%.
FAQ
What is Cash-on-Cash Return in simple terms?
Unlike cap rate, cash-on-cash accounts for your loan. It answers the question investors actually ask: what return am I earning on the money I personally put in?
How is it calculated?
CoC = Annual Cash Flow ÷ Cash Invested × 100. Example: $9,600 annual cash flow on $85,000 invested = 11.3%.