Annual pre-tax cash flow divided by the cash invested in a property.
What cash-on-cash return means in practice
This metric focuses on the return generated by the investor’s actual cash contribution. Financing choices strongly affect it, and it usually excludes appreciation, principal paydown, and tax effects.
Example
If a $60,000 cash investment produces $4,800 in annual pre-tax cash flow, the cash-on-cash return is 8%.
This glossary is educational and not legal, tax, lending, or accounting advice. Rules and terminology can vary by jurisdiction and professional context.