Cash-on-Cash Return Calculator
Cash-on-cash return measures the annual return on the actual cash you invest in a property. Unlike cap rate, it factors in your financing — showing how leverage amplifies (or diminishes) your returns.
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Cash-on-Cash Return
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Monthly Cash Flow
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Annual Cash Flow
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CoC Return = Annual Cash Flow / Total Cash Invested × 100
How to Calculate Cash-on-Cash Return (Formula & Example)
The calculator handles it instantly, but the formula is straightforward: divide your annual pre-tax cash flow by the total cash you actually invested, then convert to a percentage.
Cash-on-Cash Return = (Annual Pre-Tax Cash Flow ÷ Total Cash Invested) × 100
Step 1 — Add up total cash invested. Sum your down payment, closing costs, and any upfront rehab. This is the cash out of your pocket, not the full purchase price.
Step 2 — Find annual pre-tax cash flow. Start with net operating income (rent minus vacancy and operating expenses), then subtract your annual mortgage payments. What's left is your cash flow.
Step 3 — Divide cash flow by cash invested. Multiply by 100 to get a percentage.
Worked example
You buy a $200,000 rental with 25% down ($50,000) plus $4,000 in closing costs and $6,000 in rehab — $60,000 total cash invested. The property nets $18,600 in NOI, and your $150,000 loan at 7% costs about $11,976 a year. That leaves $6,624 in annual cash flow. Dividing $6,624 by $60,000 gives a cash-on-cash return of 11% — positive leverage at work, since the return beats the property's 9.3% cap rate.
Not sure which metric to lead with? See Cash-on-Cash Return vs. Cap Rate, or run the unlevered number with the cap rate calculator.
How Cash-on-Cash Return Works
Cash-on-cash return answers one question: “What percentage return am I earning on the cash I actually put into this deal?”
It's calculated by dividing your annual pre-tax cash flow by the total cash you invested (down payment + closing costs + rehab).
This metric is especially useful when comparing deals with different financing structures. A property bought with 20% down will have a very different cash-on-cash return than the same property bought with 25% down, even though the cap rate stays the same.
What Is a Good Cash-on-Cash Return?
Most investors target 8-12% cash-on-cash return as a baseline, but the right target depends on your market and strategy:
- 6-8%: Acceptable in appreciation markets where you expect equity growth over time.
- 8-12%: The sweet spot for most cash-flow investors. Strong returns without excessive risk.
- 12%+: Excellent, but verify your assumptions. High returns often indicate higher risk or optimistic projections.
The Impact of Leverage
Leverage is the reason cash-on-cash return exists as a separate metric from cap rate. By using a mortgage, you can amplify your returns — but leverage works both ways:
- Positive leverage: When the property's cap rate exceeds the cost of debt, borrowing increases your cash-on-cash return above the cap rate.
- Negative leverage: When interest rates are high relative to the cap rate, borrowing actually reduces your return below what an all-cash purchase would yield.
Try adjusting the down payment and interest rate sliders to see how leverage affects your return in real time.