Why agents care
Investors compare cash-on-cash returns across deals and against other investments. Showing how financing changes it helps investors choose a down payment.
Glossary term
Cash-on-cash return
Cash-on-cash return measures annual pre-tax cash flow (net operating income minus debt payments) as a percentage of the total cash invested: down payment, closing costs and rehab. Unlike cap rate, it reflects financing.
Example
Example: $4,800 annual cash flow on $105,000 invested is a 4.6% cash-on-cash return.
Pairs well with
Calculators that use this term
Related terms
Questions by topic
Cash-on-cash return: common questions
How is it different from ROI?
ROI can include appreciation and principal paydown. Cash-on-cash looks only at annual cash flow.
Can cash-on-cash be negative?
Yes, if cash flow is negative after debt payments.
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