Cash on Cash Return vs. ROI

3 Replies

I know that Cash on Cash Return = Total Cash Flow Pre-Tax/Actual Cash Invested. ROI = Net Income/Total Cost.

My question is whether the Total Cost in the ROI formula includes the Sale Price of the property or just the amount of actual cash invested.

Most people calculate ROI just like the Internal Rate of Return (IRR). You calculate your total cash outflows and inflows over the hold period. ROI is a more comprehensive calculation for the total return of an investment.

Hope that helps.

@Eric Mielke

Thanks for the feedback, I have not yet ran the numbers on bigger pockets but, I will tonight.

I’m hoping for at least $150 cash flow per door myself. Which is a number I think will change once I’m establishing and have a understanding what works for me and my business in my areas of investing