Net Gain (Net Gain on Investment)

Net Gain on Investment is a practical way to measure how much profit an investment produces relative to the cash you invested. Unlike metrics that focus on one year or one slice of performance, net gain looks at the full outcome over the hold period and helps you compare opportunities based on total wealth created.

Net gain is easiest to understand in two steps: calculate the dollar profit, then convert it into a percentage return on your invested cash.

Net Gain ($) = Total Cash Inflows − Total Cash Outflows
Net Gain on Investment (%) = Net Gain ($) ÷ Total Cash Invested × 100

Total cash inflows may include cumulative cash flow during ownership and any net proceeds from a sale. Total cash outflows typically include your initial cash investment, such as down payment and closing costs, plus any additional cash you contribute later for capital improvements or shortfalls.

Investors use Net Gain on Investment to keep the analysis grounded in reality. A property might look strong on cash flow but produce modest overall profit if appreciation is limited or selling costs are high. On the other hand, a property might have modest annual cash flow but generate strong total gains through value growth and equity buildup.

Net Gain on Investment is most useful as a summary metric. It pairs well with cash-on-cash return for annual performance and IRR when you want to account for the timing of cash flows.