What cap rate measures
Cap rate looks at NOI relative to value. It is helpful for comparing property-level performance before financing enters the picture.
What cash on cash return measures
Cash on cash return looks at the annual cash flow relative to actual equity invested. It is much closer to the investor’s lived return in year one.
Why both matter
A property with a solid cap rate may still produce weak cash on cash return if the debt is expensive or the down payment structure is inefficient. On the other hand, a deal with strong cash on cash return may be using leverage aggressively, which changes the risk profile.
How Dealarc helps
Dealarc shows both views inside one workflow so investors can compare asset quality and investor yield without jumping between tools.
The right metric depends on the decision. Use cap rate to compare properties and cash on cash return to compare financed investor outcomes. The strongest analysis uses both together.