Cash-on-Cash Return Calculator
Cash-on-cash return measures the annual cash flow a property generates relative to the actual cash you invested — your down payment, closing costs, and any rehab — rather than the full property price, which makes it the most useful metric for evaluating a leveraged rental. It ignores appreciation and loan paydown, focusing purely on the spendable cash income your invested capital produces each year, which is what most investors care about when judging whether a deal cash-flows. This calculator shows your cash-on-cash return and the total cash you invested. Enter your down payment, closing costs, rehab or repair costs, and the annual cash flow (rent minus all expenses including the mortgage payment), and the calculator returns your cash-on-cash return and total cash invested. Many investors target 8% or higher, though properties in strong appreciation markets may be acceptable at 5% to 6% because the appreciation makes up for the lower cash return, so compare against your alternative uses of cash and your goals. Cash-on-cash differs from cap rate in that cap rate ignores financing (it's an unleveraged measure), while cash-on-cash includes the mortgage and measures return on your actual cash invested (a leveraged measure), so the two answer different questions. Cash invested means your down payment, closing costs, and any rehab or repair costs you pay out of pocket — not the full property price. Don't include loan paydown in the cash flow, because cash-on-cash uses only spendable cash flow (rent minus expenses and the full mortgage payment); principal paydown is a separate return component you capture when you sell or refinance. Leverage often improves cash-on-cash return when the property's unleveraged return exceeds the loan rate, but it also amplifies losses and risk, so stress-test the deal at higher vacancy or rates before relying on the leveraged return.
Cash-on-Cash Return Calculator
Measure the annual cash return on the cash you actually invested in a property.
Cash-on-cash return
11%
Annual cash flow ÷ cash invested
Total cash invested
$83,000
Annual cash flow
$9,000
Cash-on-cash return ignores appreciation and loan paydown, focusing purely on the cash income your invested capital generates. Many investors target 8% or higher, though strong markets may accept less.
How to Use This Calculator
- 1Enter your down payment.
- 2Enter closing costs.
- 3Enter rehab or repair costs.
- 4Enter the annual cash flow (rent minus all expenses including mortgage).
- 5Read your cash-on-cash return.
Why It Helps
- ✓Measures return on actual cash invested.
- ✓Focuses on spendable income, not appreciation.
- ✓Compares leveraged properties fairly.
- ✓Helps set investment return targets.
About This Calculator
Cash-on-cash return measures the annual cash flow a property generates relative to the actual cash you invested — your down payment, closing costs, and any rehab — rather than the full property price, which makes it the most useful metric for evaluating a leveraged rental. It ignores appreciation and loan paydown, focusing purely on the spendable cash income your invested capital produces each year, which is what most investors care about when judging whether a deal cash-flows. This calculator shows your cash-on-cash return and the total cash you invested. Enter your down payment, closing costs, rehab or repair costs, and the annual cash flow (rent minus all expenses including the mortgage payment), and the calculator returns your cash-on-cash return and total cash invested. Many investors target 8% or higher, though properties in strong appreciation markets may be acceptable at 5% to 6% because the appreciation makes up for the lower cash return, so compare against your alternative uses of cash and your goals. Cash-on-cash differs from cap rate in that cap rate ignores financing (it's an unleveraged measure), while cash-on-cash includes the mortgage and measures return on your actual cash invested (a leveraged measure), so the two answer different questions. Cash invested means your down payment, closing costs, and any rehab or repair costs you pay out of pocket — not the full property price. Don't include loan paydown in the cash flow, because cash-on-cash uses only spendable cash flow (rent minus expenses and the full mortgage payment); principal paydown is a separate return component you capture when you sell or refinance. Leverage often improves cash-on-cash return when the property's unleveraged return exceeds the loan rate, but it also amplifies losses and risk, so stress-test the deal at higher vacancy or rates before relying on the leveraged return.
Disclaimer: This calculator provides estimates for educational purposes only and does not constitute financial, tax, or investment advice. Results depend on assumptions that may not reflect your actual situation.
Frequently Asked Questions
What is a good cash-on-cash return?
Many investors target 8% or higher, though properties in strong appreciation markets may be acceptable at 5-6%. Compare against your alternative uses of cash.
How is cash-on-cash different from cap rate?
Cap rate ignores financing (unleveraged). Cash-on-cash includes the mortgage, measuring return on your actual cash invested (leveraged).
What counts as cash invested?
Down payment, closing costs, and any rehab or repair costs you pay out of pocket. Not the full property price.
Should I include loan paydown in cash flow?
No. Cash-on-cash uses only spendable cash flow (rent minus expenses and mortgage payment). Principal paydown is a separate return component.
Does leverage improve cash-on-cash return?
Often yes — borrowing amplifies returns when the property's return exceeds the loan rate. But leverage also amplifies losses and risk.
Related Calculators
Related Guides
Written by
James MitchellSenior Financial Analyst & Personal Finance Expert
Certified Financial Planner (CFP) • MBA in Finance, University of Chicago Booth School of Business