March 18, 2025•2 min read
Cash on Cash Return (CoC): Is Your Investment Worth It?
RentalIntel Team
Real Estate Investment Experts
If you're investing in real estate, the big question is: "How much am I actually making?"
One of the fastest ways to tell is with Cash on Cash Return (CoC).
The Formula
Where:
- Annual Pre-Tax Cash Flow = Rental income – Expenses – Mortgage payments
- Total Cash Invested = Down payment + Closing costs + Renovations
Real-Life Example
Money You Invest
| Expense | Amount |
|---|---|
| Down Payment | $20,000 |
| Closing Costs | $5,000 |
| Renovations | $5,000 |
| Total Cash Invested | $30,000 |
Money You Make Each Year
| Income & Expenses | Amount (per year) |
|---|---|
| Rental Income | $12,000 |
| Expenses (Taxes, Repairs, etc.) | -$6,000 |
| Net Cash Flow | $6,000 |
CoC Return Calculation
What Does 20% Mean?
For every $1 you invest, you're earning $0.20 per year in cash flow.
That’s a 20% return on your actual cash—a strong number for real estate.
When CoC Matters (and When It Doesn’t)
✅ Quick way to compare deals
✅ Focuses on actual cash return
❌ Ignores property appreciation
❌ Doesn’t factor in tax benefits or mortgage paydown
Pro Tips
- Compare CoC vs. stock or bond returns
- Research market averages—good CoC varies by location
- Always double-check expenses—underestimating costs kills returns
The Bottom Line
CoC is a simple but powerful metric, but don’t rely on it alone.
Pair it with Cap Rate, ROI, and long-term equity growth for a full picture.
Would YOU invest in a 20% CoC rental? Drop your thoughts below!
