Metrics
Cash-on-Cash Return
Annual pre-tax cash flow divided by total cash invested, expressed as a percentage.
Definition
Cash-on-cash return measures the annual return on the actual cash an investor has tied up in a property. Formula: Annual Pre-Tax Cash Flow ÷ Total Cash Invested. Unlike cap rate, CoC accounts for leverage — it shows the return on equity, not on purchase price. Baltimore BRRRR deals that refinance cleanly often achieve infinite CoC because the investor has zero cash left in.
Example
Annual cash flow $6,000 ÷ $40,000 cash invested = 15% CoC.
Related terms
Capitalization Rate (Cap Rate)
A property’s annual net operating income divided by its purchase price, expressed as a per…
Net Operating Income (NOI)
A property’s annual income minus all operating expenses, before mortgage payments and cape…
BRRRR
Buy, Rehab, Rent, Refinance, Repeat — a rental-acquisition strategy using short-term debt …
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