Cash on Cash Return Calculator
This cash on cash return calculator shows the pre-tax yield you earn on the actual cash you put into a rental property. Cash-on-cash return equals annual pre-tax cash flow divided by total cash invested. Enter your numbers in the calculator above to see your percentage in seconds. It answers one question: how hard is my invested cash working this year?
How it's calculated
The cash on cash return calculator divides your annual pre-tax cash flow by the total cash you invested. Cash flow is your rental income minus operating expenses and your mortgage payment. Total cash invested is your down payment plus closing costs, not the full purchase price.
Here is a non-obvious point. Cash-on-cash measures cash flow only. It ignores appreciation, loan paydown, and tax benefits, so it understates your total return. It is also a year-one snapshot. As rents rise over time, your cash-on-cash return usually climbs too. For the full picture, pair it with our ROI calculator.
A worked example
Consider a $250,000 rental bought with 25% down and 3% closing costs. Your total cash invested is $70,000. The loan is $187,500 at 6.75% over 30 years, so monthly principal and interest is $1,216. Rent is $2,350 per month, or $28,200 a year. After 5% vacancy, effective gross income is $26,790. Operating expenses total $8,712, leaving net operating income of $18,078. Subtract the mortgage payments and annual cash flow is $3,485, or about $290 a month. Divide $3,485 by $70,000 and the cash-on-cash return is 4.98%. For comparison, the cap rate is 7.23% and the DSCR is 1.24.
Common mistakes to avoid
- Using the full purchase price as cash invested. Use only your down payment plus closing costs, not the financed amount.
- Forgetting vacancy. Always reduce gross rent for expected empty months before you calculate cash flow.
- Leaving out maintenance and management. These ongoing costs shrink cash flow and lower your true return.
- Confusing cash-on-cash with cap rate. Cap rate ignores your mortgage; cash-on-cash includes it.
- Treating it as total return. Cash-on-cash skips appreciation, loan paydown, and tax perks, so it understates lifetime gains.
Frequently asked questions
What is a cash on cash return calculator?
A cash on cash return calculator divides your annual pre-tax cash flow by the total cash you invested in a property. It returns a percentage that shows the yield on your actual money. The calculator above does this instantly once you enter rent, expenses, and your down payment. See our cash flow calculator to build the cash flow figure.
What is a good cash-on-cash return?
Many investors target a cash-on-cash return of 8% to 12%, though good depends on your market and goals. In the example above, a 4.98% return is on the lower side. Compare it against other deals and safer options like bonds before you buy.
How is cash-on-cash return different from cap rate?
Cash-on-cash return includes your mortgage payments, while cap rate ignores financing entirely. Cap rate divides net operating income by property value. Cash-on-cash divides cash flow by the cash you invested. In the example, the cap rate is 7.23% and cash-on-cash is 4.98%. Our cap rate calculator handles that metric.
Does cash-on-cash return include appreciation?
No. Cash-on-cash return measures cash flow only. It ignores appreciation, loan paydown, and tax benefits, so it understates your total return. Use it as a quick year-one screen, then layer in those other gains for the full picture.