Cash-on-cash return
Annual pre-tax cash flow divided by the total cash invested (down payment + closing costs).
In plain terms
Unlike cap rate, cash-on-cash includes the mortgage — it measures the return on the dollars you actually put in, not the property’s unlevered yield. A deal can have a solid cap rate but a negative cash-on-cash when the loan costs more than the unlevered return. Compute it with the cash-on-cash calculator.