how is cash on cash return calculated 
cash on cash returns are calculated using an investment property s pre tax cash inflows received by the investor and the pre tax outflows paid by the investor essentially it divides the net cash flow by the total cash invested for example an investor purchases a property for 1 million putting 100 000 cash as a down payment and borrowing 900 000 the investor also pays 10 000 cash for ancillary costs out of pocket the investor decides to sell the property for 1 1 million after having paid 25 000 in loan payments that include a principal repayment of 5 000 this means the investor s total cash outflow is 135 000 100 000 10 000 25000 and cash inflow is 205 000 1 100 000 895 000 so the investor s cash on cash return is 51 85 205 000 135 000 135 000 