Glossary · Australian property
Cash-on-cash return.
Annual net cashflow divided by total cash invested. The actual cash return on cash deployed, ignoring capital growth.
Cash-on-cash return = annual after-tax cashflow ÷ total cash invested. Annual cashflow = rent - interest - principal - outgoings + tax refund. Total cash invested = deposit + stamp duty + LMI + legal + inspection + buying-agent + minor reno costs.
Different from gross yield (which uses property price, not cash invested) and from IRR (which weights time value plus includes capital gain). Cash-on-cash is purely the cash side of the equation.
Typical AU IP cash-on-cash: -7% to -2% in year 1 (negative gearing dominates), trending positive over 5-10 years as rent indexes up while interest stays flat and depreciation declines. Total return adds capital growth on top. For hold-and-sell investors that's where most of the return lives.
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Open the playbook — 11 chapters end-to-end, every threshold cited.