Cash on cash return measures annual pre-tax cash flow relative to the total cash you invested. It shows the yield on the actual dollars you put into a deal, independent of financing on the rest.

Cash on cash return = annual pre-tax cash flow ÷ total cash invested. For example, $6,000 of annual cash flow on $60,000 invested is a 10% return. Estimate the cash flow input with our cash flow calculator.

Many rental investors look for 8%–12% or higher, but acceptable returns vary by market, strategy, and risk. Compare it alongside total return metrics like IRR.