Understanding Cash-on-Cash Return
How we calculate. CoC % = annual before-tax cash flow ÷ cash invested × 100. The form uses the same arithmetic as the worked examples on this page. See our methodology and accuracy policy.
Real-world scenario: A typical Cash-on-Cash Return case uses annual cash flow 12000 and cash invested 100000. Enter the same figures below to reproduce the worked path.
What is Cash-on-Cash Return?
Levered return metric for buy-and-hold rentals. Unlike cap rate, it reflects financing.
- Cash flow usually after mortgage payments
- Cash invested = down payment + closing + initial repairs
- Annualize partial-year periods
The Formula
Worked Example
Common Use Cases
- Deal compare: levered yields
- Refinance checks: cash left in deal
- Investor reports: annual performance
Pro Tips
- Don’t confuse with equity IRR
- Include CapEx reserves honestly
- Stress-test vacancy/rate hikes
Limitations: Cash-on-Cash Return results are educational real-estate planning aids—not appraisals, loan offers, or investment advice. Confirm figures with qualified professionals and your lender.
FAQ
CoC vs cap rate?
Cap rate is unlevered (NOI/value). CoC is levered cash flow vs cash in.
What if cash invested is 0?
CoC is undefined—enter positive cash invested.
Authoritative References
For real estate investing concepts, consult:
- National Association of Realtors — market and practice context
- Investopedia — Cap rate — capitalization rate basics
- CFPB — homebuying and closing education