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Key Metrics

Cash-on-Cash Return

Cash-on-Cash Return

Cash-on-Cash Return measures the annual pre-tax cash flow relative to the total cash you invested.

Formula

CoC Return = Annual Cash Flow / Total Cash Invested × 100

Example

You invest $50,000 (down payment + closing costs) and receive $5,000/year in cash flow. Your CoC return is 10%.

Why It Matters

  • Measures your actual return on the money you put in
  • Accounts for financing (unlike cap rate)
  • Easily compared to other investments (stocks, bonds)
  • A good benchmark is 8-12% for rental properties

Key Difference from Cap Rate

Cap rate ignores financing. CoC return reflects your specific deal structure and leverage.