Investment Analysis

Cash-on-Cash Return Calculator

Calculate your true return on investment. Cash-on-cash return measures the annual pre-tax cash flow relative to your actual cash invested.

Investment Details

Enter your property numbers

Cash Invested

Down payment + closing costs + rehab = the cash in the deal. Leave all three at $0 and there is no cash invested, so cash-on-cash return is n/a.

Income

share of the year the unit sits empty

Operating Expenses

Each field is labelled with its own period — /mo or /yr. Maintenance and management are charged as a share of gross annual rent.

on gross annual rent

0 if you self-manage

only what you pay, not the tenant

What is Cash-on-Cash Return?

Cash-on-cash return (CoC) is a rate of return metric that calculates the cash income earned on the actual cash invested in a property. Unlike cap rate which uses purchase price, cash-on-cash return reflects your actual out-of-pocket investment, making it more relevant for leveraged real estate investors.

Cash-on-Cash Return Formula

Cash-on-Cash Return = (Annual Pre-Tax Cash Flow ÷ Total Cash Invested) × 100

What's a Good Cash-on-Cash Return?

  • 8-12%: Generally considered a good return for rental properties
  • 12%+: Excellent return, often found in value-add or BRRRR deals
  • Below 5%: May underperform compared to passive investments like index funds

How to calculate cash-on-cash return on a rental property

Cash-on-cash return is a rental property's annual pre-tax cash flow divided by the total cash you put into the deal, shown as a percentage. It measures the yearly return on your own money after the mortgage is paid, and it leaves out appreciation, loan paydown and taxes. Many investors look for 8 percent or more.

The cash-on-cash formula

Cash-on-cash return = annual pre-tax cash flow ÷ total cash invested × 100

Annual cash flow = rent minus vacancy minus operating expenses minus mortgage payments

Total cash invested = down payment + closing costs + rehab

What counts as cash invested

Count every dollar that leaves your pocket to buy the property and make it rentable: the down payment, closing costs such as lender fees, title and prepaid items, and upfront repairs. Loan proceeds do not count because the lender funded them. If you later refinance and pull cash out, your cash invested falls and the return rises, which is why BRRRR investors track this number closely.

Worked example

A 200,000 dollar rental bought with 50,000 dollars down, 6,000 dollars of closing costs and 10,000 dollars of repairs puts 66,000 dollars of cash into the deal. It rents for 2,000 dollars a month. Using the calculator's default 8 percent vacancy, 5 percent maintenance and 8 percent management, plus 2,800 dollars a year of property tax and 1,400 dollars of insurance, net operating income is 14,760 dollars a year.

The 150,000 dollar loan at 7 percent for 30 years costs about 998 dollars a month, which is what you enter in the Mortgage Payment field, or 11,975 dollars a year. Annual cash flow is 14,760 minus 11,975, about 2,785 dollars, so cash-on-cash return is 2,785 divided by 66,000, or 4.2 percent. The payback period is 66,000 divided by 2,785, about 23.7 years.

How to read the result

The calculator grades the result: under 5 percent is below target, 5 to 8 percent fair, 8 to 12 percent good, and 12 percent or more excellent. The example lands below target even though its cap rate is a solid 7.4 percent.

The reason is leverage. The loan's payments cost about 8 percent of its balance each year, more than the 7.4 percent the property earns on its price, so every borrowed dollar pulls the return down. At a 6 percent rate the same deal returns about 6.0 percent, and bought for cash it returns 6.8 percent on 216,000 dollars invested. When the loan costs less than the property yields, leverage works the other way and lifts the return.

Why a good return varies

Targets move with the market and the plan. Investors in lower-priced markets bought for cash flow often expect double digits, while investors in expensive, appreciating areas often accept a low single-digit return because they expect growth. Older buildings and weaker locations should earn more to cover their extra risk, and higher interest rates lower cash-on-cash on the same deal.

Cash-on-cash vs cap rate vs ROI

  • Cap rate = net operating income ÷ purchase price. It ignores financing, so it compares properties on equal terms.
  • Cash-on-cash = annual cash flow ÷ cash invested. It includes the mortgage and shows the return on your own money this year.
  • ROI or total return adds principal paydown, appreciation and tax benefits, often measured over the full hold.

In the example, about 1,524 dollars of the first year's mortgage payments reduce the loan balance. Cash-on-cash treats that as a cost even though it builds your equity, which is one reason it understates the total return on a financed rental.

Frequently asked questions

What is a good cash-on-cash return?

Many rental investors target 8 to 12 percent, and this calculator labels 12 percent or more excellent and anything under 5 percent below target. The right bar depends on the market, the risk of the property and your strategy. Investors buying mainly for appreciation often accept less current cash flow.

Is cash-on-cash return the same as ROI?

No. Cash-on-cash counts only the cash flow you receive in a year. ROI or total return also counts principal paydown, appreciation and tax benefits, so on a financed rental it is usually higher than cash-on-cash when values hold steady or rise.

Do closing costs and repairs count as cash invested?

Yes. Cash invested is everything you paid out of pocket to buy the property and get it rented: the down payment, closing costs and upfront repairs. Leaving any of them out overstates the return.

Is cash-on-cash return before or after taxes?

Before. The standard formula uses pre-tax cash flow, so it ignores depreciation and income tax. Your after-tax return can be higher or lower depending on your tax situation.

Can cash-on-cash return be infinite?

If a cash-out refinance returns all of your cash, the denominator is zero and the ratio has no meaningful value. This calculator shows n/a in that case rather than an infinite return. Investors judge those deals on monthly cash flow and risk instead.

Related calculators