Cash-on-Cash Return Calculator
Cash-on-Cash Return measures the annual return a rental property produces relative to the actual cash you invested — the most direct way to answer "is this deal worth tying up my money in?"
Cash-on-Cash Return Calculator
Annual Cash Flow
$5,400
Cash-on-Cash ROI
9.82%
Cash-on-Cash ROI = Annual Cash Flow ÷ Total Cash Invested × 100. Total cash invested typically means down payment + closing costs + rehab costs paid out of pocket.
How to calculate Cash-on-Cash Return on a rental property
Cash-on-Cash ROI = Annual Cash Flow ÷ Total Cash Invested × 100. Annual cash flow is rent minus every expense including the mortgage payment. Total cash invested is what actually came out of your pocket to close the deal — typically the down payment, closing costs, and any repairs paid upfront — not the full purchase price. That last part is what separates Cash-on-Cash from Cap Rate, which measures return against the full purchase price and ignores financing.
What's a good Cash-on-Cash Return?
Many buy-and-hold investors use 8-12% as a rough screening threshold, though the right number depends on your market, risk tolerance, and what else that cash could be earning elsewhere. Leveraged deals (larger loan, smaller down payment) tend to produce higher Cash-on-Cash Return than all-cash purchases of the same property, since the return is measured against a smaller cash base — but that comes with more financing risk if rates rise or cash flow gets tight.
Worked example
$2,000/month rent against $1,550/month in total expenses (including the mortgage) leaves $450/month, or $5,400/year, in cash flow. Against $55,000 in total cash invested, that's a Cash-on-Cash Return of about 9.8%. Adjust the numbers above to see how a larger or smaller down payment changes the result.
Cash-on-Cash vs. Cap Rate
Use Cap Rate to compare properties on their own merits, independent of financing. Use Cash-on-Cash Return to answer the more personal question: given how I'd actually finance this specific deal, is it worth my cash? The two can point in different directions — a property with a modest Cap Rate can still produce a strong Cash-on-Cash Return with the right leverage, and vice versa. Run both, along with a full rental property analysis, before deciding.
FAQ
Does total cash invested include closing costs?
Yes — anything paid out of pocket to close the deal, including down payment, closing costs, and any upfront repairs, should be included for an accurate figure.
Why would an all-cash buyer care about Cash-on-Cash Return?
They typically wouldn't compare it the same way — with no loan, Cash-on-Cash Return converges toward Cap Rate, since the "cash invested" becomes the full purchase price. It's most useful when comparing leveraged deals.
Should I include vacancy in monthly expenses?
Yes — a realistic vacancy estimate (not zero) keeps this a usable, honest projection rather than a best-case scenario.