Cash-on-Cash Return

Cash-on-cash return (CoC) measures the annual pre-tax cashflow generated by a property as a percentage of the total cash you have invested in that property. It is the most useful single metric for comparing leveraged investment properties because it accounts for the fact that you borrowed most of the purchase price.

Unlike gross yield (which measures rent against total purchase price) or ROI (which may include speculative capital growth), cash-on-cash is a real, measurable return based on actual cashflow.

Total cash invested typically includes: the deposit, SDLT, legal fees, any survey costs, any refurbishment expenditure, and initial setup costs. It is the total amount of money that has left your bank account in relation to the property.

A higher cash-on-cash return indicates better use of deployed capital. For leveraged investments in the current rate environment, a cash-on-cash return of 4-8% on a standard BTL purchase is reasonable. Above 10% (typically achieved on BRRR deals with successful capital recycling) is excellent.