The Definitive Guide to IRR (Internal Rate of Return) via Bigger Pockets

The most easily understood metric of investment return in real estate is Cash on Cash Return, usually abbreviated either CCR or COC. The concept is rather simple – CCR juxtaposes the cash investment that has been made to the Cash Flow (Income minus Expenses) being received.

For example, let’s say you invest $100,000 cash to buy a 4-plex which generates $2,000/month of Gross Income which results in $1,200/month of Cash Flow. Since CCR is usually thought of in terms of annual return, we must multiply all of the monthly numbers by 12. Thus, this $100,000 4-plex is generating $14,400 of Annual Cash Flow.

Now, CCR is simply the answer to the question – if I invest $100,000 in this 4-plex, how quickly, or at what rate, would I recover my cash?

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