Calculate Cash on Cash Return: A Simple Guide to Real Estate Profitability

Last update: March 31, 2025

You're eager to gauge the profitability of your real estate investments but you want a straightforward way to see if your money is working hard enough

Cash on cash return offers a quick look at how much cash flow you actually earn compared to the cash you put in. This metric helps you assess your investment's strength and guides your financial decisions without drowning in complicated details

Understanding Cash On Cash Return

Cash on cash return measures your annual pre-tax net income against the total amount of money spent out of pocket. This calculation involves subtracting all expenses from the income the property generates each year, then dividing that figure by the total out-of-pocket cost.