Cash-on-Cash (CoC) Yield Defined
Cash-on-Cash yield measures the cash return on the actual cash invested in a property. It ignores future appreciation, principal paydown, and tax benefits, focusing purely on annual cash-flow velocity.
The Mathematical Formula
\[ \text{Cash-on-Cash Yield} = \frac{\text{Annual Net Cash Flow}}{\text{Total Cash Invested}} \times 100 \]
Component Breakdown
1. **Annual Net Cash Flow**: Net Operating Income (NOI) minus annual debt service payments (mortgage principal + interest).
2. **Total Cash Invested**: Down payment + closing costs + immediate repair/renovation capital.