Cash-on-cash return
Cash-on-cash return measures the annual pre-tax cash flow a property produces relative to the actual cash invested. Unlike cap rate, it accounts for financing, so it reflects the return on the money you put in.
The formula
Cash-on-cash return = annual pre-tax cash flow / total cash invested. If a property produces $8,000 of annual cash flow on $100,000 of cash invested, the cash-on-cash return is 8 percent.
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