Cash-on-cash: annual, pre-tax
Cash-on-cash return measures one year's pre-tax cash flow against the cash you invested. Simple and great for quick screening, but it ignores appreciation, principal paydown, and time.
ROI: total return
ROI can capture the full picture — cash flow plus appreciation plus loan paydown — over your hold, but definitions vary, so compare apples to apples.
IRR: time-weighted
IRR accounts for when cash flows arrive, making it the most complete measure for comparing deals with different timelines — but it needs a full projection to compute.
Frequently asked questions
Is cash-on-cash the same as ROI?
No. Cash-on-cash is a single-year cash-flow yield; ROI usually captures total return including appreciation and paydown.
Which metric is best?
Use cash-on-cash to screen quickly and IRR to compare deals over time.
Sources
Educational information and estimates only. Not tax advice. Tax rules change and vary by situation; consult a qualified tax professional before acting.