# Cash-on-Cash Return

*Real Estate — Finicade finance glossary*

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`

**Also known as:** cash on cash, CoC return

**Related terms:** [Cap Rate](https://finicade.com/glossary/cap-rate), [Net Operating Income](https://finicade.com/glossary/net-operating-income), [Leverage](https://finicade.com/glossary/leverage), [Rental Property](https://finicade.com/glossary/rental-property), [Equity Multiple](https://finicade.com/glossary/equity-multiple)

Source: https://finicade.com/glossary/cash-on-cash-return