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Cash-on-Cash Return Calculator

Find your cash-on-cash return.

How it is calculated

The tool computes cash-on-cash = annual cash flow / cash invested × 100. Annual cash flow is the money left over in a year after operating costs and loan payments, and cash invested is what you actually paid out of pocket: down payment, closing costs and any upfront repairs. The result is a percentage with two decimals. The tool does not look at property appreciation, loan principal paydown or taxes, so it is a pre-tax measure of yearly cash return. Cash invested must be above zero.

Worked example

A rental produces 9,600 a year in cash flow after mortgage and expenses. You put in 80,000 in total cash. Cash-on-cash: 9600 / 80000 = 0.12, which is 12.00%. In other words, each year you get back 12% of the cash you invested.

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Common mistakes

  • Using the property price as cash invested. Only the cash you paid in counts, not the portion covered by the mortgage.
  • Entering monthly cash flow. The field expects the annual figure, so multiply by 12 first.
  • Using rent income instead of cash flow, ignoring loan payments, taxes, insurance, vacancies and maintenance.
  • Leaving out closing costs and repairs from the cash invested, which makes the return look better than it is.

Sources

About this calculator

This calculator finds the cash-on-cash return — annual pre-tax cash flow divided by the total cash actually invested (down payment, closing costs, and any upfront repairs) — expressed as a percentage.

It's the metric real estate investors care about most for rental properties, because unlike overall ROI it measures the return on only the cash out of pocket, ignoring the portion of the purchase covered by a mortgage. That makes it easy to compare a leveraged property deal against other investments on equal footing.

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Comments (1)

  • Editorial team

    Cash-on-cash looks at one year of cash flow against the cash you actually put in, including down payment, closing costs and any renovation. Cash flow should already be after mortgage payments and expenses. It ignores growth in value and the principal you repay, so a modest figure can still be a decent deal. A negative cash flow gives a negative rate. Which costs do you count as invested cash in your own deals?

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