The cash on cash yield is a return measure that expresses the cash flows paid to the investor of an income-producing property as a percentage of the asset’s value at the beginning of a certain period. This performance metric is used to measure periodic returns because it involves the cash flows paid back within a certain period of time. For example, the distributions of a real estate asset might be paid to an investor on an annual, quarterly, or monthly basis. Combined with the capital growth of the asset, an investor can determine the total return of the asset over a specific period of time. The cash on cash yield is an example of a time-weighted return because it reflects the given rate of return earned over a certain period of time as a fraction of the initial asset value with no added (or subtracted) investment activity within that time period.
Cash on Cash Yield
Blog by Andrew Reid | February 7th, 2021