---
title: "What is the difference between cash-on-cash return (ROI) and IRR in self-storage?"
description: "**Short answer:** Cash-on-cash return (often called ROI) is one year’s net cash flow divided by the cash you put in; it changes year by year. IRR (internal rate of return) measures the average annual return over the whole life of…"
url: "https://creatingwealththroughselfstorage.com/docs/roi-vs-irr-self-storage/"
updated: "2026-10-16"
category: Financial Analysis
---

# What is the difference between cash-on-cash return (ROI) and IRR in self-storage?

**Short answer:** Cash-on-cash return (often called ROI) is one year’s net cash flow divided by the cash you put in; it changes year by year. IRR (internal rate of return) measures the average annual return over the whole life of an investment, including the sale, so you can compare different investments. As a smaller buyer, Mark looks at both.

## Cash-on-cash return (ROI)

Yearly net cash flow ÷ cash invested (usually the down payment). It’s calculated for each year of a projection and typically starts low during an expansion or lease-up, then rises. Investors care about it because it tells them what cash return to expect each year.

## IRR

IRR takes the cash invested at the start (time zero, shown as a negative number), each year’s net cash flow, and the net sale proceeds in the final year, and calculates one average annual return for the whole period. Comparing a five-year and a ten-year IRR on the same deal can show when selling makes more sense. Spreadsheets and tools such as the Storage World Analyzer calculate it for you.

## Which matters most?

It depends on your goals, the type of deal and its structure. For a net-leased property where the tenant pays all expenses, IRR is everything. For smaller storage buyers doing value-add deals, Mark relies on cash-on-cash and IRR together, more than cap rates, to decide whether a deal works for him.

All of these are projections based on your own assumptions, not guarantees.

## Related answers

- [What is a cap rate, and why is it so often misunderstood in self-storage?](/docs/what-is-a-cap-rate-self-storage/)
- [Why should you set benchmark returns before looking at self-storage deals?](/docs/set-benchmarks-before-evaluating-deals/)
- [How is net operating income (NOI) calculated for a self-storage facility?](/docs/how-to-calculate-noi-self-storage/)

**Source:** Mark’s post [Cap Rates, ROI, IRR – Which Matters Most in Self-Storage?](/cap-rates-roi-irr-which-matters-most-in-self-storage/)

**Want Mark’s full system?**Get his free 3-part video series on finding, analyzing and buying self-storage.

[Watch the free series](https://thequickstartacademy.com/p/free-3-part-video-series)