CoC ratio is your cash on cash return

CoC is calculated by taking monthly revenue subtracted by monthly debts over the cash invested

What is a Cash on Cash return?

Cash on Cash return is a metric used in real estate investing to calculate the annual cash income earned on an investment property as a percentage of the total cash invested. It is calculated by dividing the annual pre-tax cash flow by the total amount of cash invested, including down payment, closing costs, and any renovation expenses. The resulting percentage represents the amount of cash earned per dollar invested. A higher Cash on Cash return indicates a more profitable investment.

Why will knowing a Cash on Cash return on a property help you?

Knowing the Cash on Cash return on a property can help you determine the potential profitability of a real estate investment. It allows you to compare the amount of cash generated by the property to the amount of cash you invested, which helps you determine the rate of return on your investment.

BBy calculating the Cash on Cash return, you can assess the viability of an investment property and make informed decisions about whether or not to purchase it. You can also compare the Cash on Cash return of different properties to determine which one is likely to generate the highest return on your investment.

Ultimately, knowing the Cash on Cash return on a property can help you evaluate the potential risks and rewards of a real estate investment and make a more informed decision about whether or not to invest your money.

What is a good Cash on Cash Return?

A good Cash On Cash return be anything above 7%. However, most real estate investors shoot for above 8%-12% Cash On Cash return.

Cash-on-Cash Return (CoC) vs. Return on Investment (ROI)

Return on Investment (ROI)Cash on Cash Return (CoC) focuses on the cash flow generated by an investment relative to the initial cash invested, commonly used in real estate. The formula is (Net Operating Income / Total Cash Invested) x 100.

Return on Investment (ROI) provides a broader measure of overall profitability, considering both cash and non-cash returns. It is applicable to various types of investments, and the formula is (Net Profit / Initial Investment) x 100.