Learn COMMERCIAL REAL ESTATE INVESTMENTS at https://realestatefinanceacademy.com/ For COMMERCIAL LOANS, visit https://www.evergreen.llc/ --- Cash-on-cash return is a real estate term related to cap rates, but accounts for leverage when determining an investor's actual return on investment. Cash-on-cash return takes into account the fact that investors typically use part down payment and part loan in order to buy a piece of real estate. So, cash on cash return really tells us the return on investment to the investor after accounting for leverage. Let's take a look at the formulas, and then we'll work through it and see how it's related. 1. Cash-on-Cash Return = Net Cash Flow / Down Payment 2. Net Cash Flow = Net Operating Income - Debt Service 3. Down Payment = Purchase Price - Loan Amount Cash-on-cash return, often expressed as "C/C", is simply our net cash flow after debt service divided by the down payment. We arrive at this formula by extrapolating it from another formula. So let's take a look at it. It's actually our net operating income minus our debt service, over our value, or purchase price, minus our loan amount. Imagine here we have $80,000 of net operating income and we have $45,000 in annual debt service. That gives us $35,000 of net cash flow. If our purchase price was a million and we leveraged 750,000 of that, then our down payment would be 250,000. So our net cash flow divided by our down payment would equal approximately 14%. #realestateinvesting #realestate #TrevorCalton #realestatefinance #investing #commercialrealestate #commercialloan #commercialloans #apartmentloan #multifamilyloan #apartmentinvesting #multifamilyinvesting #EvergreenLLC #commercialloan #commercialloans #stepbystep #stepbysteptutorial #diagram #example #download #freedownload #howto CRE loan investing in real estate investment properties and commercial real estate commercial real estate lending commercial real estate loan SBA commercial real estate loan commercial real estate financing commercial property loan commercial building loan real estate lending best commercial real estate loans commercial property lending OTHER QUERIES: return on investment real estate finance investing cash on cash return real estate how to calculate cash on cash return cash on cash return formula real estate investing cash on cash return explained what is cash on cash return cash on cash return in real estate cash on cash return calculator rental property investing what is cash on cash return in real estate real estate rookie commercial real estate return on equity bigger pockets