WHAT IS CASH ON CASH RETURN?

TRANSCRIPT:

Common real estate term is cash on cash return and all that is is a measure of what you're making in cash flow now as a proportion of the money that you initially invested.

So let's say you got cash flow of $6000 this year on an investment you put in $100,000 in that is a 6% cash on cash. Now this does not represent your total returns because it doesn't take into account any kind of.

Depreciation or anything else, it is just the cash flow in this moment of time and cash flow tends to increase with time.

So it's generally gets higher and higher as rents continue go up, but your loan stays the same.

So it's just a snapshot in time.

It is the cash flow divided by your initial investment.