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Real Estate · Return

Cash-on-Cash Return

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Use cash-on-cash return to compare yearly cash yield against the cash actually put into the deal.

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Interactive workbench

Equity cash yield

Annual Pre-Tax Cash FlowTotal Cash Invested

$24,000 annual cash flow on $200,000 invested equals a 12% cash-on-cash return.

Step 1 of 3

Variables and units

  • Annual Pre-Tax Cash Flow

    Expected annual cash flow before taxes.

    currency

  • Total Cash Invested

    Total cash committed to the investment.

    currency

Common mistakes

  • Using total purchase price instead of cash invested.
  • Using after-tax cash flow when comparing pre-tax deals.

Step-by-step example

Equity cash yield

  1. 1. Start with the example inputs

    • Annual Pre-Tax Cash Flow$24,000
    • Total Cash Invested$200,000

  2. 2. Apply the formula

    Annual Pre-Tax Cash FlowTotal Cash Invested

  3. 3. Run the numbers

    12%

    $24,000 annual cash flow on $200,000 invested equals a 12% cash-on-cash return.

What this result means

12% is the cash yield your first year's pre-tax cash flow earns on the actual cash you put in — unlike cap rate, it reflects your financing. The right bar depends on leverage and risk; compare it against your other deals and against what the same cash could earn elsewhere.