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Cash on Cash Return (CoC)
Interpretation
About Cash on Cash Return Calculator
Calculation Method
Cash-on-Cash Return (CoC) is one of the most important metrics in real estate investing. It measures the annual pre-tax cash flow return on the actual cash you invested (down payment, closing costs, rehab costs, etc.). Unlike Cap Rate, CoC takes into account the impact of leverage (financing), making it a better indicator of your personal return on investment.
Formula
The formula for calculating Cash-on-Cash Return is:
Cash on Cash Return = (Annual Pre-Tax Cash Flow / Total Cash Invested) × 100%
Key Terms
- Annual Pre-Tax Cash Flow
- This is the net cash remaining from your property after paying all operating expenses (taxes, insurance, maintenance) and mortgage payments (principal + interest).
- Total Cash Invested
- This is the total sum of cash you paid to acquire the property, including down payment, closing costs, and initial renovation costs. It does not include the loan amount.
How to Use
- Enter the expected Annual Pre-Tax Cash Flow (NOI minus debt service).
- Enter the Total Cash Invested to acquire the property (down payment, closing costs, rehab, etc.).
- Click 'Calculate Return' to see your Cash-on-Cash Return percentage.
- Use the interpretation guide to evaluate the immediate cash flow efficiency.
Tips & FAQ
- Cash-on-Cash Return (CoC) measures the efficiency of your actual invested capital.
- Unlike Cap Rate, CoC accounts for leverage (loans), reflecting your true personal return.
- A CoC of 8-12% is generally considered good, though it varies by market and risk profile.
- All calculations are performed locally in your browser for complete privacy.
