What is Cash-on-Cash Return?
Cash-on-Cash Return (CoC) measures the annual return on the actual cash you've invested. Unlike cap rate, which ignores financing, CoC shows your real return on out-of-pocket investment.
What's a Good Cash-on-Cash Return?
- 8-12% — Standard for stabilized multifamily
- 12-20% — Expected for value-add deals
- 15-25%+ — Typical for opportunistic investments
Factors That Affect CoC Return
- Interest rate — Lower rates increase cash flow
- Leverage — More debt can boost returns
- Down payment — Less cash invested = higher CoC
- Vacancy — Higher occupancy = more income