Cash-on-Cash Return
Also called: cash on cash, CoC return
Cash-on-cash return divides annual pre-tax cash flow by the cash you actually invested, so it captures the effect of the mortgage. It's the number that tells a leveraged buyer what their money is earning, and it can far exceed the cap rate when borrowing costs sit below it — the same leverage that turns a modest yield into a strong one, and a small setback into a wipeout.
Formula
Cash-on-cash = Annual pre-tax cash flow ÷ Total cash invested