What Is Cash-on-Cash Return?
Cash-on-cash return measures the annual pre-tax cash income a property generates relative to the actual cash invested — typically the down payment, closing costs, and any upfront renovation spend.
Formula
Cash-on-Cash Return = Annual Pre-Tax Cash Flow ÷ Total Cash Invested × 100
Example
A property producing $6,000 in annual cash flow on a $75,000 total cash investment has an 8% cash-on-cash return.
Why It Matters
Unlike cap rate, cash-on-cash return accounts for financing — it reflects the actual return on the money an investor put down, not the property's full value.
Cash-on-Cash Return Calculator →