Free Tool
Cash-on-Cash Return Calculator
Find the cash-on-cash return on a rental property: annual pre-tax cash flow divided by the cash you actually invested. Change the down payment to see how financing moves the number.
| Total cash invested (down payment + closing + rehab) | — |
| Loan amount | — |
| Monthly mortgage payment (principal & interest) | — |
| Annual rent collected (after vacancy) | — |
| Net operating income (before mortgage) | — |
| Loan principal paid down in year 1 | — |
| Return including principal paydown (for reference) | — |
Assumptions: fixed-rate loan, principal & interest only; operating costs exclude the mortgage. Cash-on-cash return = annual pre-tax cash flow ÷ total cash invested. No income tax, depreciation or appreciation is included. Estimates only, not advice.
What is cash-on-cash return?
Cash-on-cash return measures how much pre-tax cash a rental property throws off each year compared with the actual cash you put in. The formula is simple: annual pre-tax cash flow ÷ total cash invested. "Cash invested" means your down payment, closing costs and any cash you spend on repairs, not the purchase price. Because it uses your own cash, it changes with your financing, which makes it the go-to number for comparing different loan structures on the same property. Use the rental property ROI calculator if you also want cap rate, total ROI and the 1% rule on one screen.
Worked example with the default inputs
- Purchase price $200,000, down payment $40,000 (20%), closing costs $4,000, no rehab. Cash invested = $44,000.
- Loan $160,000 at 6.5% for 30 years gives a payment of $1,011/month, or $12,136 a year.
- Rent $1,800/month × 12 = $21,600; after 5% vacancy, rent collected is $20,520.
- Operating costs of $600/month = $7,200 a year, so NOI is $13,320.
- Annual cash flow = $13,320 − $12,136 = $1,184 (about $99/month).
- Cash-on-cash return = $1,184 ÷ $44,000 = 2.69%.
Counting the roughly $1,788 of loan principal repaid in year one as part of the return (the calculator shows this as a separate line) lifts the figure to 6.76%, because that money builds equity even though it is not cash in your pocket.
How the down payment changes cash-on-cash return
Change only the down payment and the result moves a lot. With $20,000 down (10%), the loan grows to $180,000, the payment rises to $1,138/month, annual cash flow falls to -$333 and cash-on-cash return becomes -1.39%. With $80,000 down (40%), the loan shrinks to $120,000, annual cash flow rises to $4,218, and cash-on-cash return is 5.02% on $84,000 invested. Borrowing helps the percentage only when the property's yield beats the annual cost of the loan (interest plus principal repayment); at these inputs it does not, so more cash in lifts the return. Different inputs can reverse that, which is why testing your own numbers matters. A high percentage on a tiny cash flow is also not automatically better than a lower percentage with a more comfortable margin.
Cash-on-cash return vs ROI vs cap rate
Cap rate (NOI ÷ price) ignores financing. Cash-on-cash return is financing-dependent and only counts cash flow. Total ROI adds principal paydown and appreciation. See the cap rate calculator for the first and the ROI calculator for the last. As a general reference only, investors often talk about cash-on-cash returns in the high single digits or more as healthy, but what is reasonable varies by market, risk and your alternatives, and this is not advice.
What counts as cash invested?
Include the down payment, lender and legal closing costs, inspection fees, and any rehab or furnishing paid up front. Do not include the mortgage balance. Leave out cash you plan to recover soon, such as a refundable deposit. If you refinance and pull cash out later, cash invested drops and the percentage can jump, so recompute at that point.
Frequently asked questions
How do you calculate cash-on-cash return on a rental property?
Divide annual pre-tax cash flow (net operating income minus the yearly mortgage payments) by the total cash you invested, which is the down payment plus closing costs plus any cash rehab. Multiply by 100 to express it as a percentage.
What is a good cash-on-cash return?
There is no universal answer. Investors commonly mention returns from the high single digits upward as reasonable, but the right level depends on your market, the risk, your financing and what else you could do with the money. Treat any range as a general reference rather than advice.
Is cash-on-cash return the same as ROI?
No. Cash-on-cash return counts only annual pre-tax cash flow against cash invested. ROI is a broader term and often also includes principal paydown, appreciation and tax effects. The rental property ROI calculator shows both.
Does cash-on-cash return include appreciation or principal paydown?
Not in its standard form. This calculator reports the standard figure as the headline and also shows a second figure that adds first-year principal paydown, so you can see the equity-building effect separately.
Can cash-on-cash return be negative or undefined?
It is negative when the property's cash flow after the mortgage is negative. It is undefined if you invested no cash at all, and in that case this calculator shows a dash instead of a number.
How does the down payment affect cash-on-cash return?
A smaller down payment reduces the cash invested but increases the mortgage payment. It raises cash-on-cash return only if the property's income comfortably exceeds the extra loan cost; otherwise it can push cash flow and the return down, even negative. Try different down payments in the calculator to see which side your deal falls on.
Related rental property calculators
- Rental Property ROI Calculator — the hub: cash flow, cash-on-cash, cap rate, total ROI and the 1% rule in one place.
- Cap Rate Calculator — net operating income divided by price, independent of financing.
- Rental Property Cash Flow Calculator — monthly income, expenses, mortgage, break-even rent and DSCR.
- 1% Rule Calculator — a 10-second screen of rent against price.
- Airbnb vs Long-Term Rental Calculator — compare short-stay income to a standard lease.
- Rental Income & Expense Spreadsheet and Rental Property Expense Tracker — track the real numbers once you own the property.
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