Cash on Cash Return Calculator

Annual Cash Flow From Investment ($):
Total Investment Amount ($):
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About Cash on Cash Return Calculator (Formula)

A Cash on Cash Return calculator is a tool used to evaluate the profitability of an investment property by measuring the cash flow generated in relation to the amount of cash invested. It helps real estate investors determine the return on their investment based on the cash income received relative to the initial cash outlay. While the specific formula used in a Cash on Cash Return calculator may vary, here is a general overview of the key components typically considered:

1. Annual Net Operating Income (NOI): The first step is to calculate the net operating income, which represents the property’s annual income after subtracting operating expenses such as property management fees, property taxes, insurance, maintenance costs, and vacancies.
2. Cash Invested: This refers to the total amount of cash invested in the property, including the down payment, closing costs, and any additional capital expenditures made to acquire or improve the property.
3. Cash on Cash Return Calculation: The Cash on Cash Return is calculated by dividing the Annual Net Operating Income by the Cash Invested and expressing the result as a percentage.

Cash on Cash Return = (Annual Net Operating Income / Cash Invested) x 100

By using this formula, real estate investors can assess the profitability of their property investment based on the cash returns generated relative to the amount of cash invested. The Cash on Cash Return metric helps investors compare different investment opportunities, evaluate the potential risks and rewards, and make informed decisions regarding the viability and performance of their real estate investments.

It’s important to note that while the Cash on Cash Return provides valuable insights into the cash flow aspect of an investment, it does not account for other factors such as property appreciation, tax implications, and financing costs. Therefore, it’s advisable to consider additional metrics and consult with professionals to gain a comprehensive understanding of the overall investment performance.