Why it matters
This metric answers a practical question: what yield am I getting on the cash I had to commit? It is especially useful because financing changes everything. Two investors can buy the same property and have very different cash-on-cash returns.
PropLurk take: If you only use the down payment, the return looks cleaner than reality. Closing costs and immediate repairs paid with real money too.
- Annual cash flow: $5,400
- Down payment, closing, rehab, and reserves: $54,000
Result: $5,400 / $54,000 = 10% cash-on-cash return
Usually include
- Down payment
- Closing costs
- Immediate rehab
- Required reserves
- Annual pre-tax cash flow after debt service
Do not mix in
- Unrealized appreciation
- Paper tax losses
- Principal paydown as spendable cash
- Cash you did not actually commit
Common ways investors mess this up
- Using purchase price as cash invested
- Leaving rehab out of the denominator
- Comparing a stabilized year with a partial first year
- Treating principal reduction as monthly cash flow
How PropLurk uses it
PropLurk keeps the cash invested line visible so the return does not float away from the actual capital required.
This guide is educational and does not provide investment, lending, tax, legal, or appraisal advice. Verify the specific property, lender, and local rules before making decisions.
See cash-on-cash return next to the rest of the deal.
PropLurk keeps the definition, formula, assumptions, offer, and decision record connected so the number does not get lost in another spreadsheet.