Cash on cash return is a metric used in real estate investment that measures the annual pre-tax cash flow generated by an investment property relative to the total cash invested. It’s expressed as a percentage and helps investors assess the profitability of a property in relation to the actual cash they've put in. This return is particularly useful for evaluating the performance of income-generating properties, as it focuses on actual cash earnings instead of overall return calculations that may include financing and depreciation.
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