A cash-on-cash return, also known as a cash yield, is a metric commonly used in commercial real estate investing. It is a rate of return that calculates the cash income earned on cash invested in a property, generally on a pre-tax basis. In real estate transactions, it often measures the annual return the investor received on a property relative to the amount of mortgage paid in the same year.
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How to Calculate the IRR of Your Real Estate Investment (And Why It Matters)
Unlike the ROI, which measures total growth from the beginning to the end of the investment, the IRR identifies the annual growth rate. Many investors prefer to use the IRR rather than ROI calculations, especially when researching long-term investments.