Deal Analysis
Cash-on-Cash Return Calculator
Measure the annual return on the actual cash you put into a rental property deal.
Investment breakdown
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How rental property returns work
Cash-on-cash return is the metric most investors use to measure the return on the actual cash they put into a deal. Unlike cap rate, which ignores financing, cash-on-cash return accounts for the mortgage payment and tells you how hard your invested capital is working. The formula is simple: cash-on-cash return = annual pre-tax cash flow divided by total cash invested, times 100, expressed as a percentage. Annual pre-tax cash flow is the money left over at the end of the year after collecting rent, paying all operating expenses, and making every mortgage payment. It is the real spendable income the property produces — or the amount you have to feed it if the number is negative. Total cash invested is everything that came out of your pocket to acquire the property. That typically includes the down payment, closing costs (loan fees, title, inspection, appraisal), and any rehab costs needed to make the unit rent-ready. If you are buying a turnkey property, rehab may be zero. If you are buying a fixer-upper, it can be a large share of your total investment. A common benchmark is 8% or higher for cash-flow markets, though many investors are happy with 6% if they expect appreciation. In high-leverage scenarios with low interest rates, cash-on-cash returns can exceed 12%, but those deals carry more risk if rates rise or rents soften. Cash-on-cash return is best paired with cap rate. Cap rate tells you about the property; cash-on-cash tells you about your investment structure. A property can have a strong cap rate but a weak cash-on-cash return if financing is expensive, and vice versa. Running both numbers gives you the full picture before you commit your capital.
Worked example
You buy a $250,000 duplex with a 25% down payment ($62,500). Closing costs are $4,000 and light rehab totals $6,000. Your total cash invested is $62,500 + $4,000 + $6,000 = $72,500.
After collecting rent and paying all operating expenses and the mortgage, your annual pre-tax cash flow is $6,800. Cash-on-cash return = $6,800 / $72,500 × 100 = 9.4%.
For comparison, the property cap rate is 7.2%, but because your mortgage rate is 7%, leverage only modestly boosts your return. If you had put 20% down instead, your cash invested would drop to about $60,000 but your mortgage payment would rise, likely lowering cash flow and your cash-on-cash return. The trade-off between down payment and return is exactly what this calculator helps you explore.
Frequently asked questions
What is a good cash-on-cash return for a rental property?
Many investors target 8% or higher, though it depends on your market and goals. In high-appreciation markets, investors often accept 5–7% because they expect property values to rise. In cash-flow markets, 8–12% is common. There is no universal "good" number — it is a tool for comparing your options.
What counts as total cash invested?
Total cash invested includes everything that comes out of your pocket: the down payment, closing costs (loan fees, title, inspection, appraisal), and any rehab costs needed to make the property rent-ready. It does not include the loan amount itself, since that is the bank money, not yours.
Should I use monthly or annual cash flow?
Either works — the calculator lets you enter monthly cash flow and multiplies it by 12 automatically, or enter annual cash flow directly. Use whichever figure you have. Just be consistent and do not mix the two.
How is cash-on-cash return different from cap rate?
Cap rate is unlevered — it divides net operating income by property value and ignores financing. Cash-on-cash return is levered — it divides annual cash flow (after the mortgage) by your actual cash invested. Cap rate compares properties; cash-on-cash compares your investment structure.
Can cash-on-cash return be negative?
Yes. If your mortgage payment and operating expenses exceed your rental income, your annual cash flow is negative and so is your cash-on-cash return. That means you are feeding the property out of pocket. It can still make sense if appreciation is strong, but it adds risk.
More Deal Analysis tools
- Rental Property Calculator Analyze cash flow, cash-on-cash return, cap rate, and GRM for any rental property.
- Cap Rate Calculator Calculate net operating income and capitalization rate for any rental property.
- Rental Yield Calculator Calculate gross and net rental yield to compare income relative to property price.
- Gross Rent Multiplier Calculator Screen deals fast with the gross rent multiplier and implied price at a target GRM.
- 1% Rule Calculator Check whether a rental deal meets the 1% rule and see the rent needed to pass.
- ARV Calculator Estimate after-repair value and maximum allowable offer for a fix-and-flip or BRRRR deal.