Questions of the Week | What Is Cash on Cash Return and Why It Matters?

In this Questions of the Week segment on the REI Hot Seat, we break down one of the most important metrics in real estate investing: cash on cash return.We explain what cash on cash actually means, how to calculate it properly, and why it is often the most important number investors should be paying attention to. We also walk through common mistakes, like leaving out key closing costs or expenses, and how that can make deals look better than they actually are.This episode also covers how to use cash on cash as a tool to compare investments, filter deals, and even help determine whether a property is priced correctly in today’s market.If you are analyzing multifamily or commercial deals, this is a foundational concept you need to understand.Have a question you want us to answer next week? Send it our way and we will cover it.Sign up to the REI Hot Seat Insiderhttps://www.jotform.com/form/241655418022249REI Hot Seat Instagramhttps://www.instagram.com/reihotseat/David Hulshof Instagramhttps://www.instagram.com/davehulshof.realestate/Jacob Campagnaro Instagramhttps://www.instagram.com/jacob_campagnaro/Questions of the Week |What Is Cash on Cash Return and Why It Matters?0:00 Questions of the Week intro0:24 What is cash on cash return1:17 What counts as closing costs2:22 Common mistakes in calculations3:07 Using cash on cash to compare investments4:04 Why expenses matter more than you think4:48 Cash flow vs mortgage paydown5:20 Adding rent growth and appreciation6:16 Using cash on cash to filter deals6:39 Using it to validate pricingDISCLAIMER: THIS EPISODE, AS WITH EVERY EPISODE OF THIS SHOW, SHOULD NOT BE CONSIDERED AS ADVICE. INVESTMENT ADVICE IS NEVER GIVEN ON THIS SHOW. ALWAYS CONSULT A COMPETENT INVESTMENT ADVISOR BEFORE MAKING AN INVESTMENT DECISION.