1. What is Cash On Cash Return?

Cash on Cash (COC) return is a rate of return ratio that calculates the total cash earned on the total cash invested. It's commonly used in real estate investments to evaluate the profitability of an investment property.

2. How Does the Calculator Work?

The calculator uses the Cash on Cash formula:

Where:

• \( Annual Cash Flow \) — Net cash generated from the investment in one year ($)
• \( Cash Invested \) — Total amount of cash invested in the property ($)

Explanation: The formula measures the percentage return on the actual cash invested in a property, providing a clear picture of investment performance.

3. Importance of Cash On Cash Return

Details: COC return helps investors compare different investment opportunities, assess the efficiency of their cash utilization, and make informed decisions about property investments.

4. Using the Calculator

Tips: Enter the annual cash flow and total cash invested in dollars. Both values must be positive numbers, with cash invested greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What is a good cash on cash return?
A: Generally, a COC return of 8-12% is considered good, but this varies by market and investment strategy.

Q2: How does COC differ from ROI?
A: COC focuses specifically on the actual cash invested, while ROI may consider total investment including financed amounts.

Q3: Should I include mortgage payments in the calculation?
A: Yes, mortgage payments should be included in your cash flow calculations as they affect the net cash generated.

Q4: Can COC return be negative?
A: Yes, if the property generates negative cash flow (expenses exceed income), the COC return will be negative.

Q5: How often should I calculate COC return?
A: It's best to calculate COC return annually, but you can also calculate it for different time periods to track performance.