Cash-on-Cash Return: How to Make the Calculation

The Cash-on-Cash return (or CoC) is a popular rate of return anyone engaged in real estate investing should understand because they undoubtedly will see it posted in some real estate analysis report at one time or another.

Its popularity is mostly attributed to the fact that the cash-on-cash return is easy to calculate, and it does provide a quick and easy way for real estate investors compare several investment opportunities at one time.

What it Does

Cash-on-cash measures the ratio between the total cash investment a real estate investor initially makes to purchase a rental property and the amount of cash flow generated by the property in any particular year. Namely, CoC shows the yield an investor might expect to collect on his or her cash investment.

Cash-on-Cash Return = Annual Cash Flow / Initial Cash Investment

• Gross Scheduled Income
• - Vacancy and Credit Loss
• - Operating Expenses
• - Debt Service
• = Annual Cash Flow

• Down Payment
• + Loan Points
• + Escrow and title fees
• + Appraisal and inspection costs
• = Initial Cash Investment

You purchased a duplex with an initial cash investment of $100,000 and are projecting an annual gross rental income of $50,000, 4% vacancy, 28% operating expenses, and a debt service of $25,000. You want to know your cash on cash return.

The following image is a screenshot taken from iCalculator that shows you the calculation and CoC result from our example.

So You Know

The cash-on-cash return is just one of 62 real estate calculators included in iCalculator. They are all easy to use, accessible online from any device 24/7, and each makes it possible to compute even complex calculations quickly.