what does cash on cash mean in real estate?
The cash on cash return is a simple measure of investment performance that is quick and easy. It can be a good starting point for quickly filtering out potential investment properties. But donât be fooled by the many limitations of the cash on cash return. Consider the following series of cash flows: The year 1 cash on cash return in the levered example above shows a 3% cash on cash return. To find this simply take the end of year (EOY) 1 cash flow of $15,805 and divide it by the initial equity investment of $515,000. But as you can see in the table above, the internal rate of return (IRR) is 10.71%.