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.