Cash on cash return is a measurement for the value of a rental investment. If there is a loan, cash-on-cash return is before tax cash flow divided by the amount of cash invested by the investor into the property. If there is not a loan, cash-on-cash return is net operating income divided by the amount of cash invested by the investor into the property.
Now here is an example of these calculations. We will use a sample property priced at $100,000, Gross Scheduled Income of $10,000, Other Income of $1,000, a 10% vacancy allowance, and $5,000 operating expenses.
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