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Cash-on-Cash Return

Cash-on-cash return focuses on levered equity yield — annual cash flow divided by cash invested.

Reading time
5 min read
Difficulty
Intermediate
Last updated
Last updated:

Vs cap rate

Cap rate is unlevered (NOI ÷ price).

Cash-on-cash reflects financing and cash invested at closing.

Key takeaways

  • Use actual cash invested including closing costs
  • Compare to alternative yields and mortgage cost

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FAQ

Pre-tax or after-tax?
Investors often quote pre-tax cash-on-cash; model taxes separately for your bracket.