An often-used rate of return in real estate transactions that determines the cash income produced on the cash invested in a property is called a Cash-On-Cash Return. It is important to understand this metric when making an investment, as it can help you determine whether or not a property is worth your money. The higher the cash-on-cash return, the more advantageous the investment becomes.There are several factors that influence a property's cash-on-cash return. The most significant are rental income and expenses incurred while owning the property. Other considerations include loan terms, down payment amount, and appreciation rates. By understanding how each of these elements impacts your bottom line, you can make more informed decisions about where to invest your money.While no one can predict with certainty which investments will be profitable in the future, analyzing a potential purchase using a cash-on-cash return can give you a good idea of its potential success. So before you buy any piece of real estate, be sure to calculate this important metric and see if it meets your expectations!
