GLOSSARY · INVESTING

Cash-on-cash return

A rental property's yearly cash flow after the mortgage and all costs, divided by the cash the owner actually invested (down payment, closing costs and initial repairs). It shows what the owner's own money earns each year and is highly sensitive to the loan's interest rate. It ignores appreciation, loan paydown and taxes.

Also called: cash on cash, cash yield on equity
FORMULA
Cash-on-cash return = yearly cash flow after debt payments ÷ cash invested
COMPUTE IT WITH YOUR NUMBERS
IRR Calculator →What return did uneven cash flows produce?
LEARN IT PROPERLY
CHAPTER · ADVANCED INVESTMENT STRATEGIES · DEEP DIVEOwning Rental Property Directly
RELATED TERMS
Capitalization rate
SOURCES
All terms →The Library →