Cash-on-Cash Return (COC)

Cash-on-Cash Return measures the annual cash flow relative to the total amount of cash invested in the deal.

Formula

Cash-on-Cash Return = (Annual Cash Flow / Total Invested Capital) * 100

*Note: Total Invested Capital includes down payments, closing costs, rehab expenses, and lender fees.*

What this tells you

COC calculates the cash yield on your actual cash outlays, as opposed to overall property value. It shows how hard your actual dollars are working for you.

How to improve it

• Increase Leverage: Secure higher Loan-to-Value (LTV) ratios to minimize the initial cash down payment.
• Raise Cash Flow: Reduce debt costs or raise rental rates.