Joe Capote – Certified Investment Agent Specialist Expert in Real Estate Investments and Properties

Cash on Cash Return (CCR) is a measurement of cash flow based on an investor’s initial investment (down payment plus closing costs). Because cash flow return is a key benefit of real estate investment, cash on cash return is an important measurement for investors to understand.

The CCR is calculated by taking the cash flow generated by a property over a year and dividing it by the initial investment (down payment plus closing costs).

Example:

1. An investor puts $20,000 on a property, plus $3000 in closing costs.
2. The total initial investment is $23,000

$20,000 + $3000 = $23,000

1. After expenses and mortgage payments, the property cash flows for $4000 for the year.

$14,000 (rent) – $6000 (mortgage) – $4000 (Expenses) = $4000 (Cash Flow)

The cash-on-cash return is 17.4%

$4000/$23,000 = .174 (17.4%)

This figure let’s the investor know how well the investment is performing.

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