West Virginia - Some Of The Best Cash On Cash Returns In The Country
Understanding Real Estate Investment Returns: Why West Virginia Investors Are Seeing Over 20% Cash-on-Cash Returns
When it comes to investing in real estate, knowing how to measure your return is just as important as finding the right property. At L&L Property Management, we work with investors every day who rely on two key metrics to evaluate performance: Capitalization Rate (Cap Rate) and Cash-on-Cash Return. Each tells a different story—and both are essential to smart investing.
1. What Is Cap Rate?
Cap Rate is a popular measure that evaluates the net operating income (NOI) of a property relative to its purchase price. The formula is:
Cap Rate = Net Operating Income / Purchase Price
For example, if a property generates $10,000 in annual net income and was purchased for $100,000, the cap rate is 10%. This metric is especially useful for comparing different properties or market areas, as it doesn’t include the impact of financing or leverage.
Cap rates are a solid tool for understanding property performance, but they don’t give the full picture when you're using financing—which brings us to our next metric.
2. What Is Cash-on-Cash Return?
Cash-on-Cash Return measures the return on the actual cash you’ve invested, accounting for the effects of financing. The formula is:
Cash-on-Cash Return = Annual Pre-Tax Cash Flow / Total Cash Invested
Let’s say you put $25,000 down on a rental property and it generates $5,000 in annual cash flow after expenses and loan payments. Your cash-on-cash return would be:
$5,000 / $25,000 = 20%
This metric is a favorite among real estate investors because it reflects real money in your pocket—and here in West Virginia, the results are impressive.
Why West Virginia Is a Top Market for Cash-on-Cash Returns
At L&L Property Management, our investors are consistently seeing cash-on-cash returns that exceed 20%, on average—numbers that far outperform traditional investments.
To put that in perspective, the S&P 500's average cash-on-cash return (dividends plus price growth relative to capital invested) typically falls between 7% and 10% annually. That’s less than half of what many real estate investors have achieved here in West Virginia.
With low property acquisition costs, strong rental demand, and growing local markets like Charleston, Teays Valley, and Huntington, West Virginia offers the perfect mix of affordability and return potential.
Which Metric Should You Use?
The truth is: both. Cap Rate is great for comparing properties, while Cash-on-Cash Return shows how well your investment is actually performing based on your financing structure. Together, they help you make smart, profitable decisions.
Final Thoughts
If you’re looking to grow your wealth through real estate, understanding Cap Rate and Cash-on-Cash Return is essential. These tools give you the insights you need to evaluate properties wisely and make data-driven investment decisions.
West Virginia continues to emerge as a compelling market for real estate investors. Thanks to lower property prices and strong rental demand, many investors in the L&L Property Management network have achieved cash-on-cash returns exceeding 20%. While every investment carries its own risks and outcomes will vary, the potential for strong performance in this region remains high.
At L&L Property Management, we’re here to help you identify opportunities, navigate the numbers, and manage your investment properties with confidence. Reach out today to learn how we can support your real estate goals.