The short answer
Define the return measure before calculating it. Cash-on-cash return, unlevered operating yield and total investment return answer different questions; state the period, costs and treatment of appreciation and financing.
On this page
Establish the inputs
Use documented income, vacancy, expenses, debt service, capital work and invested cash. Separate actual results from projections and avoid combining pre-tax cash with after-tax assumptions.
Test downside cases
Model lower occupancy, higher repairs and financing changes. A single attractive percentage can conceal a property that needs cash during vacancies or major replacements.
Worked example
Annual pre-tax cash flow of $6,000 on $100,000 cash invested is a 6% cash-on-cash return. It is not a complete total-return measure because it excludes items such as appreciation, sale costs and tax effects.
References and next steps
Use these references for the specific topic they cover. Local requirements and individual circumstances may differ.
Written and maintained by the Rentari team. Examples explain a decision; they are not customer results. Found an error or an unclear step? Send a correction with this page's address and the detail to review.
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