EstimatorCash-on-Cash Return Calculator
Measure a rental property's return on the cash you actually put in. Unlike cap rate, cash-on-cash accounts for your down payment, closing costs, and mortgage — so it tells you what your money is really earning.
| Down payment | $0 |
| Total cash invested | $0 |
| Annual pre-tax cash flow | $0 |
| Monthly cash flow | $0 |
How it works
Cash-on-cash return = Annual pre-tax cash flow ÷ Total cash invested. Total cash invested is your down payment plus closing costs (and any initial rehab). Cash flow is what's left after every expense, including the mortgage payment.
Formula & worked example
Formula: Cash invested = down payment (price × down-payment %) + closing costs. Cash-on-cash return = annual before-tax cash flow ÷ cash invested × 100.
Worked example: Buy at $300,000 with 25% down ($75,000) plus $6,000 of closing costs and you have $81,000 invested. Cash flow of $7,290 a year before tax gives 7,290 ÷ 81,000 = 9.00%.
When to use this
- You are buying with a mortgage and want the return on your actual cash, not on the property's full price.
- The same property is on the table at two different down payments and you want to see what the smaller deposit does to the return.
- Closing costs are larger than you expected and you want their effect on the deal's yield, in percent.
- You screen rentals against a personal cash-on-cash target before touring any of them.
How to use it, step by step
- Enter the purchase price.
- Set the down payment percent you actually plan to make.
- Enter realistic closing costs — lender fees, title and prepaids, not a hopeful round zero.
- Enter the annual pre-tax cash flow after every expense including the mortgage, ideally from a full rental analysis.
- Read the return, then re-run at a different down payment to watch leverage help and hurt.
What the inputs mean
| Input | What it is | Typical values |
|---|---|---|
| Purchase price | The price the property is bought at | Contract price, before closing costs |
| Down payment % | Share of the price paid in cash at closing | Investor loans commonly 15–25% |
| Closing costs | Cash needed at closing beyond the down payment | Often roughly 2–5% of the price |
| Annual pre-tax cash flow | What is left each year after all expenses and the mortgage | Rent minus everything, vacancy included |
Another worked example
On a $320,000 purchase with 20% down, the down payment is $64,000 and $6,400 of closing costs bring total cash invested to $70,400. If the property produces $5,280 a year of pre-tax cash flow — $440 a month — the cash-on-cash return is 7.50%. That figure, not the rent headline, is what your $70,400 is actually earning.
Frequently asked questions
What is a good cash-on-cash return?
Many investors target 8–12% as a solid baseline for residential rentals, and want it to beat what that cash could earn elsewhere. Your personal target depends on risk tolerance and market — set it before you shop.
Cash-on-cash vs. cap rate — which matters more?
They answer different questions. Cap rate (financing-neutral) compares properties; cash-on-cash (financing-aware) judges your specific deal. Run both on every property you seriously consider.
Why does leverage change the return so much?
A smaller down payment means less cash invested, so the same cash flow produces a higher percentage return — but also higher risk, higher payments, and thinner margins if anything goes wrong. Try 10% vs 25% down above.
How do I include upfront repair costs in the cash invested?
Add them to the closing costs field. This tool builds cash invested as down payment plus whatever you enter there, so purchase-day spending — a new roof, a rehab budget, lender fees — all belongs in that one box. Money you plan to spend in month six is different: leave it out of the entry price, but hold it as a reserve when you judge whether the deal is safe.
Is cash-on-cash my total return on the property?
No — it counts only the cash flow against the cash in. It ignores the principal your tenants pay down each year, any appreciation, and tax effects, all of which are real parts of a rental's return. Cash-on-cash is a first-year cash yield and a screening tool; a deal can show a modest cash-on-cash and still build wealth through paydown, or a fat one and go nowhere else.
Which cash flow should I use — the seller's first-year figure or a longer view?
Use a conservative, stabilised first year: market rent, a vacancy allowance, and maintenance at a level an older property will actually demand, not the seller's best-ever twelve months. Cash-on-cash is unusually sensitive to this input because one rosy rent assumption inflates the return every year you quote it. If the deal only clears your target on the seller's numbers, it does not clear it.
🏠 Compare properties properly
Pair this with the cap rate calculator to screen deals on both metrics.