Cash-on-Cash Return is what you would use to compare your investment to other types of investments, like stocks. To calculate Cash-on-Cash Return, take the Annual Cash flow and divide it by the Down Payment amount.
Annual Cash Flow
Down Payment
Lets see it with an example from Camden Towns.
Cash Flow: $6,515
20% of purchase Price:
$17,400
Rewritten
6,515/17,400= 37%
The cash on cash return for this Camden Towns example is 37%.
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Investment Anaylisis from HarrisonburgInvestmentProperties.com
This is a continuation of a serious entitled: The Top 10 Terms of Commercial/Investment Real Estate.