Cash-on-Cash Return Calculator

Example scenario

A property generating $18,000 annual cash flow with $200,000 total cash invested yields a 9.

Sample inputs

Annual pre-tax cash flow ($): 18000
Total cash invested ($): 200000

Sample results

Cash-on-cash return (%): See calculator result
Annual cash flow ($): See calculator result
Total cash invested ($): See calculator result

Common mistakes

Misunderstanding: What is a good cash-on-cash return — Targets vary by market and risk.
Misunderstanding: How is cash-on-cash different from cap rate — Cap rate = NOI ÷ Property value (unlevered, ignores financing).
Using default inputs without adjusting them to match your cash-on-cash return calculator scenario.
Treating this estimate as a final number without checking real estate assumptions that apply to your situation.

Decision guide

Cash-on-cash return measures how much cash income an investment generates relative to the cash you actually put in — down payment, closing costs, and initial repairs. Use the result as a planning checkpoint — not a substitute for professional advice where rules are complex.

Trust the projection more when

Calculate annual pre-tax cash flow: gross rent minus operating expenses and debt service
Enter total cash invested: down payment + closing costs + renovation costs at acquisition
Review the cash-on-cash return percentage

Revisit inputs when

Compare to your target yield and alternative investments (stocks, bonds, other properties)
Cross-check with cap rate (unlevered) and total return including appreciation
Your jurisdiction, tax status, or contract terms differ from the example.

Cash-on-cash return measures how much cash income an investment generates relative to the cash you actually put in — down payment, closing costs, and initial repairs. Unlike cap rate (which uses property value), cash-on-cash reflects the leveraged return on your equity. It is the go-to metric for rental property investors comparing deals with different financing structures.

How to use this calculator

Calculate annual pre-tax cash flow: gross rent minus operating expenses and debt service.
Enter total cash invested: down payment + closing costs + renovation costs at acquisition.
Review the cash-on-cash return percentage.
Compare to your target yield and alternative investments (stocks, bonds, other properties).
Cross-check with cap rate (unlevered) and total return including appreciation.

Formula

Cash-on-cash return (%) = (Annual pre-tax cash flow ÷ Total cash invested) × 100. Cash flow should be after all operating expenses and mortgage payments but before income taxes and principal paydown.

Example

A property generating $18,000 annual cash flow with $200,000 total cash invested yields a 9.0% cash-on-cash return. If your mortgage rate is 7%, you are earning 2 percentage points above your borrowing cost on equity.

Frequently asked questions

What is a good cash-on-cash return?

Targets vary by market and risk. Many investors aim for 8–12% cash-on-cash on stabilized rentals. High-appreciation markets may accept lower cash yields (4–6%) betting on equity growth.

How is cash-on-cash different from cap rate?

Cap rate = NOI ÷ Property value (unlevered, ignores financing). Cash-on-cash = Cash flow ÷ Cash invested (levered, reflects your actual equity return). A property can have a 6% cap rate but 12% cash-on-cash with favorable leverage.

Should I include principal paydown in cash flow?

Standard cash-on-cash uses cash flow after debt service (which includes principal). Principal paydown builds equity but is not cash in your pocket — some investors track cash-on-cash before principal for a purer yield measure.

Is cash-on-cash pre-tax or after-tax?

This calculator uses pre-tax cash flow — the standard convention. After-tax cash-on-cash requires estimating depreciation benefits and income tax on rental income.