{"id":1499,"date":"2025-07-01T19:35:31","date_gmt":"2025-07-01T19:35:31","guid":{"rendered":"https:\/\/propertyfinder.bg\/cash-on-cash-return-the-power-of-your-pocket-when-investing-in-property\/"},"modified":"2025-07-14T16:14:26","modified_gmt":"2025-07-14T16:14:26","slug":"cash-on-cash-return-the-power-of-your-pocket-when-investing-in-property","status":"publish","type":"post","link":"https:\/\/propertyfinder.bg\/en\/cash-on-cash-return-the-power-of-your-pocket-when-investing-in-property\/","title":{"rendered":"Cash-on-Cash Return: the power of your pocket when investing in property"},"content":{"rendered":"\n<div class=\"wp-block-rank-math-toc-block\" id=\"rank-math-toc\"><h2>Contents<\/h2><nav><ul><li class=\"\"><a href=\"#%D0%BA%D0%B0%D0%BA%D0%B2%D0%BE-%D0%B5-%D0%B4%D0%BE%D1%85%D0%BE%D0%B4%D0%BD%D0%BE%D1%81%D1%82-%D0%B2%D1%8A%D1%80%D1%85%D1%83-%D1%81%D0%BE%D0%B1%D1%81%D1%82%D0%B2%D0%B5%D0%BD%D0%B8%D1%8F-%D0%BA%D0%B0%D0%BF%D0%B8%D1%82%D0%B0%D0%BB-cash-on-cash-return\">What is Return on Equity (Cash-on-Cash Return)<\/a><\/li><li class=\"\"><a href=\"#%D1%84%D0%BE%D1%80%D0%BC%D1%83%D0%BB%D0%B0-%D0%B7%D0%B0-%D0%B8%D0%B7%D1%87%D0%B8%D1%81%D0%BB%D0%B5%D0%BD%D0%B8%D0%B5-%D0%BD%D0%B0-cash-on-cash-return\">Cash-on-Cash Return Calculation Formula<\/a><\/li><li class=\"\"><a href=\"#%D0%BE%D1%81%D0%BD%D0%BE%D0%B2%D0%BD%D0%B8-%D0%BA%D0%BE%D0%BC%D0%BF%D0%BE%D0%BD%D0%B5%D0%BD%D1%82%D0%B8-%D0%BD%D0%B0-%D1%84%D0%BE%D1%80%D0%BC%D1%83%D0%BB%D0%B0%D1%82%D0%B0\">Main components of the formula<\/a><ul><li class=\"\"><a href=\"#1-%D0%B3%D0%BE%D0%B4%D0%B8%D1%88%D0%B5%D0%BD-%D0%BF%D0%B0%D1%80%D0%B8%D1%87%D0%B5%D0%BD-%D0%BF%D0%BE%D1%82%D0%BE%D0%BA-%D0%BF%D1%80%D0%B5%D0%B4%D0%B8-%D0%B4%D0%B0%D0%BD%D1%8A%D1%86%D0%B8-btcf\">1. Annual pre-tax cash flow (BTCF)<\/a><\/li><li class=\"\"><a href=\"#2-%D0%BE%D0%B1%D1%89%D0%BE-%D0%B8%D0%BD%D0%B2%D0%B5%D1%81%D1%82%D0%B8%D1%80%D0%B0%D0%BD-%D1%81%D0%BE%D0%B1%D1%81%D1%82%D0%B2%D0%B5%D0%BD-%D0%BA%D0%B0%D0%BF%D0%B8%D1%82%D0%B0%D0%BB\">2. Total invested equity<\/a><\/li><\/ul><\/li><li class=\"\"><a href=\"#%D0%BF%D1%80%D0%B8%D0%BC%D0%B5%D1%80-%D0%B7%D0%B0-%D0%B8%D0%B7%D1%87%D0%B8%D1%81%D0%BB%D0%B5%D0%BD%D0%B8%D0%B5-%D0%BD%D0%B0-cash-on-cash-return\">Cash-on-Cash Return Calculation Example<\/a><ul><li class=\"\"><a href=\"#%D0%B4%D0%BE%D0%BF%D1%8A%D0%BB%D0%BD%D0%B8%D1%82%D0%B5%D0%BB%D0%BD%D0%B8-%D0%B4%D0%B0%D0%BD%D0%BD%D0%B8\">Additional data:<\/a><\/li><li class=\"\"><a href=\"#%D0%B8%D0%B7%D1%87%D0%B8%D1%81%D0%BB%D0%B5%D0%BD%D0%B8%D0%B5\">Calculation:<\/a><\/li><\/ul><\/li><li class=\"\"><a href=\"#%D0%BA%D0%B0%D0%BA%D0%B2%D0%BE-%D0%BF%D0%BE%D0%BA%D0%B0%D0%B7%D0%B2%D0%B0-cash-on-cash-return\">What Cash-on-Cash Return Shows<\/a><\/li><li class=\"\"><a href=\"#%D0%BA%D0%B0%D0%BA-%D1%80%D0%B5%D1%84%D0%B8%D0%BD%D0%B0%D0%BD%D1%81%D0%B8%D1%80%D0%B0%D0%BD%D0%B5%D1%82%D0%BE-%D0%B2%D0%BB%D0%B8%D1%8F%D0%B5-%D0%BD%D0%B0-co-c-return\">How Refinancing Affects CoC Return<\/a><\/li><li class=\"\"><a href=\"#%D0%B7%D0%B0%D0%BA%D0%BB%D1%8E%D1%87%D0%B5%D0%BD%D0%B8%D0%B5\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n\n<p>We continue our series on calculating property yields. Having introduced <a href=\"\/en\/?p=1468\" data-type=\"post\" data-id=\"526\">ROI<\/a>, today we&#8217;ll focus on a highly practical metric, particularly for investors using financing &#8211; <strong>return on equity<\/strong>, or what&#8217;s known as <strong>Cash-on-Cash Return (CoC)<\/strong>. <\/p>\n\n<h2 class=\"wp-block-heading\" id=\"&#x43A;&#x430;&#x43A;&#x432;&#x43E;-&#x435;-&#x434;&#x43E;&#x445;&#x43E;&#x434;&#x43D;&#x43E;&#x441;&#x442;-&#x432;&#x44A;&#x440;&#x445;&#x443;-&#x441;&#x43E;&#x431;&#x441;&#x442;&#x432;&#x435;&#x43D;&#x438;&#x44F;-&#x43A;&#x430;&#x43F;&#x438;&#x442;&#x430;&#x43B;-cash-on-cash-return\">What is Return on Equity (Cash-on-Cash Return)<\/h2>\n\n<p>Return on equity, better known as <strong>Cash-on-Cash Return (CoC)<\/strong>, is an important metric for investors who use financing (mortgage credit) to purchase a property. This metric measures what the return is relative to the equity you actually put in &#8211; i.e. the money you have taken &#8220;out of pocket&#8221;. <\/p>\n\n<h2 class=\"wp-block-heading\" id=\"&#x444;&#x43E;&#x440;&#x43C;&#x443;&#x43B;&#x430;-&#x437;&#x430;-&#x438;&#x437;&#x447;&#x438;&#x441;&#x43B;&#x435;&#x43D;&#x438;&#x435;-&#x43D;&#x430;-cash-on-cash-return\">Cash-on-Cash Return Calculation Formula<\/h2>\n\n<p>Cash-on-Cash Return (%) = (Annual pre-tax cash flow (BTCF) \/ Total invested equity) \u00d7 100<\/p>\n\n<h2 class=\"wp-block-heading\" id=\"&#x43E;&#x441;&#x43D;&#x43E;&#x432;&#x43D;&#x438;-&#x43A;&#x43E;&#x43C;&#x43F;&#x43E;&#x43D;&#x435;&#x43D;&#x442;&#x438;-&#x43D;&#x430;-&#x444;&#x43E;&#x440;&#x43C;&#x443;&#x43B;&#x430;&#x442;&#x430;\">Main components of the formula<\/h2>\n\n<h3 class=\"wp-block-heading\" id=\"1-&#x433;&#x43E;&#x434;&#x438;&#x448;&#x435;&#x43D;-&#x43F;&#x430;&#x440;&#x438;&#x447;&#x435;&#x43D;-&#x43F;&#x43E;&#x442;&#x43E;&#x43A;-&#x43F;&#x440;&#x435;&#x434;&#x438;-&#x434;&#x430;&#x43D;&#x44A;&#x446;&#x438;-btcf\">1. Annual pre-tax cash flow (BTCF)<\/h3>\n\n<p>It is calculated by subtracting the annual debt service costs &#8211; that is, the mortgage payments including principal and interest &#8211; from the annual net operating income (NOI).<\/p>\n\n<p>BTCF = NOI &#8211; Annual Mortgage Payments<\/p>\n\n<h3 class=\"wp-block-heading\" id=\"2-&#x43E;&#x431;&#x449;&#x43E;-&#x438;&#x43D;&#x432;&#x435;&#x441;&#x442;&#x438;&#x440;&#x430;&#x43D;-&#x441;&#x43E;&#x431;&#x441;&#x442;&#x432;&#x435;&#x43D;-&#x43A;&#x430;&#x43F;&#x438;&#x442;&#x430;&#x43B;\">2. Total invested equity<\/h3>\n\n<p>This is the total amount of cash that the investor has personally invested in the deal. Includes: <\/p>\n\n<ul class=\"wp-block-list\">\n<li>The mortgage down payment<\/li>\n\n\n\n<li>All costs of the property acquisition (notary fees, commissions, etc.)<\/li>\n\n\n\n<li>Expenditure on initial repairs or improvements paid for from own resources<\/li>\n<\/ul>\n\n<h2 class=\"wp-block-heading\" id=\"&#x43F;&#x440;&#x438;&#x43C;&#x435;&#x440;-&#x437;&#x430;-&#x438;&#x437;&#x447;&#x438;&#x441;&#x43B;&#x435;&#x43D;&#x438;&#x435;-&#x43D;&#x430;-cash-on-cash-return\">Cash-on-Cash Return Calculation Example<\/h2>\n\n<p>We will use the data from the example of ROI for a financed purchase, adding in the cost of initial improvements.<\/p>\n\n<ul class=\"wp-block-list\">\n<li>Property acquisition price: \u20ac100,000<\/li>\n\n\n\n<li>Acquisition costs: \u20ac10,000<\/li>\n\n\n\n<li>Total transaction value: \u20ac110,000<\/li>\n\n\n\n<li>Down payment: \u20ac20,000<\/li>\n\n\n\n<li>Acquisition costs (paid in cash): \u20ac10,000<\/li>\n\n\n\n<li>Initial improvement costs (paid in cash): \u20ac5,000<\/li>\n<\/ul>\n\n<p>Total invested equity: \u20ac20,000 + \u20ac10,000 + \u20ac5,000 = \u20ac35,000<\/p>\n\n<h3 class=\"wp-block-heading\" id=\"&#x434;&#x43E;&#x43F;&#x44A;&#x43B;&#x43D;&#x438;&#x442;&#x435;&#x43B;&#x43D;&#x438;-&#x434;&#x430;&#x43D;&#x43D;&#x438;\">Additional data:<\/h3>\n\n<ul class=\"wp-block-list\">\n<li>Annual rental income: \u20ac12,000<\/li>\n\n\n\n<li>Annual operating costs: \u20ac3,600<\/li>\n\n\n\n<li>NOI (Net Operating Income): \u20ac12,000 &#8211; \u20ac3,600 = \u20ac8,400<\/li>\n\n\n\n<li>Annual mortgage payments: \u20ac5,153.52<\/li>\n\n\n\n<li>BTCF (Annual cash flow before taxes): \u20ac8,400 &#8211; \u20ac5,153.52 = \u20ac3,246.48<\/li>\n<\/ul>\n\n<h3 class=\"wp-block-heading\" id=\"&#x438;&#x437;&#x447;&#x438;&#x441;&#x43B;&#x435;&#x43D;&#x438;&#x435;\">Calculation:<\/h3>\n\n<p>Cash-on-Cash Return (%) = (\u20ac3,246.48 \/ \u20ac35,000) \u00d7 100 = 9.28%<\/p>\n\n<h2 class=\"wp-block-heading\" id=\"&#x43A;&#x430;&#x43A;&#x432;&#x43E;-&#x43F;&#x43E;&#x43A;&#x430;&#x437;&#x432;&#x430;-cash-on-cash-return\">What Cash-on-Cash Return Shows<\/h2>\n\n<p>The CoC Return indicator shows what the return is on the equity you actually invest. In other words, it answers the question: <\/p>\n\n<p><strong>&#8220;How much of my own money is working in this deal?&#8221;<\/strong><\/p>\n\n<p>This indicator is extremely useful for investors who:<\/p>\n\n<ul class=\"wp-block-list\">\n<li>Use a mortgage loan<\/li>\n\n\n\n<li>Looking to generate regular cash flow<\/li>\n\n\n\n<li>They want to compare the performance of different deals against the equity invested<\/li>\n<\/ul>\n\n<p>Unlike ROI, which can include capital gains (not currently realized), CoC Return focuses on the actual money made from rental activity.<\/p>\n\n<h2 class=\"wp-block-heading\" id=\"&#x43A;&#x430;&#x43A;-&#x440;&#x435;&#x444;&#x438;&#x43D;&#x430;&#x43D;&#x441;&#x438;&#x440;&#x430;&#x43D;&#x435;&#x442;&#x43E;-&#x432;&#x43B;&#x438;&#x44F;&#x435;-&#x43D;&#x430;-co-c-return\">How Refinancing Affects CoC Return<\/h2>\n\n<p>A strategy that can positively impact CoC Return is to refinance the property. If: <\/p>\n\n<ul class=\"wp-block-list\">\n<li>The market value of the property has increased<\/li>\n\n\n\n<li>There are favourable lending conditions<\/li>\n<\/ul>\n\n<p>You can refinance the property and take out some of the equity (cash-out refinance). This reduces the amount of equity locked up in the property and, with the same cash flow, results in a higher CoC Return. <\/p>\n\n<p>It is important to keep in mind that this strategy increases the amount of debt and monthly payments, which carries additional risk.<\/p>\n\n<h2 class=\"wp-block-heading\" id=\"&#x437;&#x430;&#x43A;&#x43B;&#x44E;&#x447;&#x435;&#x43D;&#x438;&#x435;\">Conclusion<\/h2>\n\n<p><strong>Cash-on-Cash Return<\/strong> is one of the most practical metrics for investors who use debt financing. It gives you a clear picture of the performance of your equity and how much you are actually earning on your investment. <\/p>\n\n<p>In the next article we will look at the <strong><a href=\"\/en\/?p=1464\" data-type=\"post\" data-id=\"534\">Cap Rate<\/a><\/strong>, another important tool for quick comparison and analysis of property investments.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>We continue our series on calculating property yields. Having introduced ROI, today we&#8217;ll focus on a highly practical metric, particularly for investors using financing &#8211; return on equity, or what&#8217;s known as Cash-on-Cash Return (CoC). What is Return on Equity (Cash-on-Cash Return) Return on equity, better known as Cash-on-Cash Return (CoC), is an important metric<\/p>\n","protected":false},"author":1,"featured_media":1330,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"yes","_lmt_disable":"","footnotes":""},"categories":[319],"tags":[373,372,339,336],"class_list":["post-1499","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-investing-basics","tag-cash-flow","tag-equity","tag-property-investments","tag-yield-on-property"],"modified_by":"Tsa Zan","_links":{"self":[{"href":"https:\/\/propertyfinder.bg\/en\/wp-json\/wp\/v2\/posts\/1499","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/propertyfinder.bg\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/propertyfinder.bg\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/propertyfinder.bg\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/propertyfinder.bg\/en\/wp-json\/wp\/v2\/comments?post=1499"}],"version-history":[{"count":0,"href":"https:\/\/propertyfinder.bg\/en\/wp-json\/wp\/v2\/posts\/1499\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/propertyfinder.bg\/en\/wp-json\/wp\/v2\/media\/1330"}],"wp:attachment":[{"href":"https:\/\/propertyfinder.bg\/en\/wp-json\/wp\/v2\/media?parent=1499"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/propertyfinder.bg\/en\/wp-json\/wp\/v2\/categories?post=1499"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/propertyfinder.bg\/en\/wp-json\/wp\/v2\/tags?post=1499"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}