Cash-on-Cash Return

Cash-on-Cash Return = Annual Cash Flow / Total Cash Invested. If you invest $30,000 in a deal and it generates $4,500/year in net cash flow after all expenses and debt service, your CoC is 15%. This is the most common return metric for leveraged rental investments. Seller-financed deals with low or zero down payment can produce theoretically infinite CoC returns in year one - technically undefined since the denominator approaches zero. More practically, CoC should be calculated on total cash invested including closing costs, reserves, and any initial improvements.