Rule of 72

The rule of 72 estimates how many years an investment takes to double: divide 72 by the annual rate of return. Applied to cash on cash return, it gives a quick sense of how long cash flow alone would take to double your money if every dollar were reinvested at the same rate.

At 6.3% the answer is about 11.4 years. At 9% it is eight, and at 12% it is six. Those figures assume compounding, so they only hold if each year's cash flow goes into something earning the same return.

The shortcut undercounts a rental's total return because it leaves out appreciation and principal paydown. A property with a modest cash on cash return can still double an investor's equity sooner through those two. Treat the rule of 72 result as the cash flow floor, not the full picture.

Further reading: Rule of 72 on Wikipedia.