Glossary
Cash-on-cash return
Annual cash flow after the mortgage, as a percentage of the cash you put in.
What it means
Cash-on-cash return is the yearly cash a property puts in your pocket, after the mortgage and all running costs, divided by the cash you invested: deposit, stamp duty, fees and any refurb. It leaves out capital growth, so it is the most honest measure of how hard your money is working right now.
Worked example
ExampleA buy-to-let that clears £250 a month after the mortgage and costs. Your cash in was £38,000.
- Annual cash flow
- £250 × 12 = £3,000
- Cash-on-cash
- £3,000 ÷ £38,000 = 7.9%
7.9% a year on your cash, before tax and before any rise in value.
Information, not advice. Example figures are fictional and for illustration only.