Cash on Cash Analyses
Property Address: 1349 Bryan Street, Memphis, TN 38108
Cash on Cash Return is a percentage that measures the return
on cash invested in an income producing property. It is calculated by dividing
before-tax cash flow by the amount of cash invested (down payment amount)
and is expressed as a percentage.
Net Cash Flow Cash on Cash 6978
X 100 = X 100 = 21%
Cash Invested Investment 33000
Rent
Annual Before Tax Cash Flow 750
Yearly annual income: 9000
Yearly expenses: 1500
Annual Net Operating Income: 7500
Annual Taxes: 522
Net Annual Cash Flow: 6978
The Cash on Cash Return is used to evaluate the profitability of income
producing properties. It is an important analysis tool when comparing
multiple income properties. The investor should rank income properties
based on their potential return on investment and the cash on cash return
should be given a strong weighting. However, the cash on cash return
calculation does have some limitations. It is a before tax calculation and
doesn't include the impact of an investor's tax bracket on their returns.