Cash-on-Cash Return Calculator
Cash-on-cash is the levered cousin of cap rate. It tells you what your actual cash invested earns each year — after the mortgage, after operating expenses, in your pocket.
Property & Financing
Cash-on-cash measures the levered return on your actual cash invested.
Typically 2–5% of purchase price.
Includes taxes, insurance, maintenance, vacancy, capex, management. NOT mortgage.
Your Cash-on-Cash Return
Below typical investor thresholds — verify the appreciation thesis before buying.
What is cash-on-cash return?
Cash-on-cash return measures the annual pre-tax cash flow a rental property generates relative to the cash you actually invested. Unlike cap rate, which ignores financing, cash-on-cash factors in your mortgage — so it answers the practical question: “What is my money earning each year in this deal?”
The formula
What counts as a good cash-on-cash?
- 5–8%: Acceptable in major metros where appreciation drives total return.
- 8–12%: Solid for stable secondary markets — most pros target this range.
- 12%+: Strong, typical of value-add, BRRRR, or aggressive cash-flow markets.
- <5%: Tight margin. Verify the appreciation thesis or pass.
Cash-on-cash vs. ROI
Cash-on-cash is just the cash flow component. Total ROI also includes appreciation, principal paydown, and tax savings — usually 2–3× the cash-on-cash number. Use cash-on-cash for current yield; use ROI for total wealth-building efficiency. See the Rental ROI Calculator for the full picture.
Frequently asked questions
What is cash-on-cash return?
Cash-on-cash (CoC) return is annual pre-tax cash flow divided by total cash invested. It measures the levered return on the actual cash you put into a deal — down payment, closing costs, and rehab.
How is cash-on-cash calculated?
CoC = Annual Cash Flow ÷ Total Cash Invested × 100. Annual Cash Flow = NOI − Annual Debt Service. Total Cash Invested = Down Payment + Closing Costs + Renovations.
What’s the difference between cap rate and cash-on-cash?
Cap rate is unlevered: NOI ÷ Purchase Price. Cash-on-cash is levered: cash flow ÷ cash invested. With financing, cash-on-cash is usually higher than cap rate because leverage amplifies returns. Cap rate compares deals; cash-on-cash measures your actual return.
What’s a good cash-on-cash return?
8%+ is solid in most stable markets. 12%+ is strong, typical of value-add or BRRRR deals. 5–8% is acceptable in appreciation-driven markets. Below 5% leaves no margin for surprises.
Should I include the mortgage in cash-on-cash?
Yes — that’s the whole point. Cash-on-cash subtracts the full mortgage payment (P&I) from NOI. The "cash flow" in the numerator is what hits your bank account each month, after debt service.
Why is my cash-on-cash negative?
Either the rent is too low for the price, the operating expense ratio is too high, the loan is too expensive (high rate or short term), or the down payment is too small. Check each variable — typically the issue is rent vs. price.
Does cash-on-cash include appreciation?
No. Cash-on-cash is current-year cash flow only. To include appreciation, principal paydown, and tax savings, use the full ROI calculator.
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