Cash-on-Cash Return Calculator
Calculate the cash-on-cash return on your rental property investment based on actual cash invested and annual cash flow.
Results
Visualization
How It Works
Cash-on-cash return measures the annual pre-tax cash flow relative to the actual cash you put into a deal. Unlike cap rate, it accounts for leverage — so a property financed with a mortgage will show a different CoC than one bought outright. It tells you how hard your actual dollars are working.
The Formula
Variables
- Annual Cash Flow — Rental income minus all expenses including debt service (mortgage payments), before income taxes
- Total Cash Invested — All out-of-pocket cash: down payment, closing costs, renovation costs, and any initial capital expenditures
- CoC Return — Percentage return earned on your actual cash investment each year
- Payback Period — Number of years to recoup your total cash investment from cash flow alone
Worked Example
You invest $72,000 cash total — $60,000 down payment, $7,000 closing costs, and $5,000 in repairs. After mortgage payments and all expenses, you net $7,200 per year in cash flow. CoC return = ($7,200 / $72,000) x 100 = 10.0%. Your cash will pay for itself in 10 years from cash flow alone, not counting appreciation or equity paydown.
Practical Tips
- Most investors target a minimum 8-12% cash-on-cash return for buy-and-hold rentals.
- CoC return improves over time as rents rise but your mortgage payment stays fixed.
- Include ALL cash spent — closing costs and repairs are real money out of your pocket.
- A negative CoC means you're feeding the property each month — fine if appreciation is strong, but risky.
- Compare CoC to alternative investments: a 10% CoC vs. a 10% stock return has very different risk profiles.
Frequently Asked Questions
What is a good cash-on-cash return?
Most experienced investors target 8-12% for standard buy-and-hold rentals. Above 12% is excellent. Below 6%, you may want to reconsider unless you're counting on strong appreciation.
How is cash-on-cash different from cap rate?
Cap rate ignores financing — it measures the property's return. Cash-on-cash measures YOUR return on the cash you actually invested. With a mortgage, CoC can be much higher than cap rate due to leverage.
Should I include renovation costs in total cash invested?
Yes. Every dollar you spend before the property generates income is part of your total cash invested — down payment, closing costs, inspections, renovations, and furnishing.
Does cash-on-cash return account for appreciation?
No. It only measures cash flow returns. Appreciation, loan paydown, and tax benefits are separate return components. Use total ROI to capture all four pillars of real estate return.
Can cash-on-cash return be infinite?
Technically yes — in a BRRRR deal where you refinance and pull out all your cash, your cash invested is zero or negative, making the return undefined or infinite. In practice, investors call this an 'infinite return' scenario.