Cash on Cash Return Calculator
Cash-on-cash return is the most important metric for leveraged real estate investors. Unlike cap rate (unlevered), cash-on-cash includes your mortgage payment and shows the actual return on the cash you put down. Formula: Annual Cash Flow / Total Cash Invested × 100. A 10% cash-on-cash means for every $100,000 invested, you get $10,000/year in cash flow. Most rental investors target 8%+ cash-on-cash.
paymentsInvestment
trending_upReturns
tips_and_updates Tips
- • Target 8%+ cash-on-cash return for buy-and-hold rentals
- • Higher leverage = higher COC% when cash-flowing, but more risk
- • Don't forget closing costs and initial repairs in cash invested
- • 5% vacancy is typical; use 7-10% in soft markets
- • Operating expenses usually run 30-50% of gross rent
- • Negative cash flow can still work if appreciation is strong (speculation)
- • Refinancing improves COC by reducing initial cash investment
functions Formula
science Example: $300k property, 25% down, $30k rent, 7% mortgage
$300k × 25% = $75k down + $6k closing + $4k rehab = $85k total cash invested. NOI = $30k rent − $1.5k vacancy − $8k expenses = $20.5k. Mortgage on $225k @ 7% × 30y = $17,963/year. Cash flow = $20,500 − $17,963 = $2,537. COC return = $2,537 / $85,000 = 2.98%. This is below the 8%+ target — consider higher rent, lower price, or larger down payment.
Expected Results
How to Use This Calculator
Enter purchase + down payment
Property price and down payment %.
Add closing + rehab
All upfront cash beyond down payment.
Enter annual rent + vacancy
Realistic rent estimate and vacancy assumption.
Set operating expenses
Taxes, insurance, mgmt, repairs (not mortgage).
Set interest rate + term
Mortgage details for cash flow calculation.
Review COC return
Target 8%+ for solid rental investment.
The Formula
Cash-on-cash measures the levered return on your actual out-of-pocket investment. It's more relevant than cap rate for individual investors because it accounts for financing. Higher leverage (smaller down payment) generally increases cash-on-cash return when the property cash-flows positively, but also increases risk.
Cash-on-Cash = Annual Cash Flow / Total Cash Invested × 100
lightbulb Variables Explained
- Annual Cash Flow NOI − annual mortgage payment
- Total Cash Invested Down payment + closing costs + initial repairs
- NOI Effective rent − operating expenses (excludes mortgage)
tips_and_updates Pro Tips
Target 8%+ cash-on-cash return for buy-and-hold rentals
Higher leverage = higher COC% when cash-flowing, but more risk
Don't forget closing costs and initial repairs in cash invested
5% vacancy is typical; use 7-10% in soft markets
Operating expenses usually run 30-50% of gross rent
Negative cash flow can still work if appreciation is strong (speculation)
Refinancing improves COC by reducing initial cash investment
Frequently Asked Questions
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Data sourced from trusted institutions
All formulas verified against official standards.