Cash-on-Cash Return

Cash-on-cash return measures the annual pre-tax cash flow an investor receives relative to the actual cash they invested, expressed as a percentage. Unlike cap rate, it accounts for financing.

Example

A property throwing off $650,000 in NOI with $518,936 in annual debt service leaves $131,064 in cash flow. On $3,750,000 of cash invested, that's a 3.5% cash-on-cash return.

Formula

Annual Pre-Tax Cash Flow ÷ Total Cash Invested = Cash-on-Cash Return

Excel Formula:

• B8 = NOI
• B12 = Annual Debt Service
• B10 = Total Project Cost
• B11 = Loan Amount