09/17/2026
The same Vallejo fourplex can return 10 percent and 15 percent at the same time. Both numbers are honest.
That is not a trick. They answer two different questions.
Cap rate measures the building. It assumes you walked in and paid all cash, which almost nobody does. A $500,000 fourplex earning $50,000 a year is a 10 percent cap rate.
Cash on cash return measures you. Net annual cash flow divided by total cash invested. $18,000 of cash flow on the $120,000 you actually put in is 15 percent.
The building never changed. The loan carried part of the purchase, so your money went to work on a smaller base.
If you are looking at small multifamily in Vallejo or anywhere in Solano County, this is worth running before you get attached to a property. Cap rate tells you whether the building is priced fairly for this market. Cash on cash tells you what your money is actually doing once the financing is real.