Cash-on-Cash Return (CoC)
Direct definition
Annual pre-tax cash flow divided by the total cash invested, expressed as a percentage.
Written by the Vabasso Mortgage Editorial Team · Reviewed against agency and federal sources · Read our editorial policy for how we research and review mortgage content
Plain-English explanation
CoC measures the return on the actual dollars you put into a deal — down payment, closing costs, and initial repairs — rather than the property's total value.
Why it matters
It's the clearest indicator of how hard your invested cash is working.
Where you may see it
- Investment property analysis
- Property income statement
A real-world example
You put $80,000 into a rental that produces $6,400/year of cash flow: an 8% cash-on-cash return.
Educational and illustrative only
A common misunderstanding
It's not a measure of total return — it excludes appreciation, principal paydown, and tax benefits.
Ask Vabasso AI
This glossary provides general educational information. Mortgage terminology, qualification methods, forms, timelines, fees, program rules, and legal meanings may vary by lender, investor, loan program, property, occupancy, state, and transaction. Definitions do not represent loan approval, legal advice, tax advice, or a commitment to lend.
- Author
- Vabasso Mortgage Editorial Team
- Reviewed by
- Vabasso Mortgage Licensed Advisory Team
- Last reviewed
- July 30, 2026