Cash-on-Cash Return Calculator

People also ask

What is a cash-on-cash return calculator?

A cash-on-cash return calculator divides a rental property's annual pre-tax cash flow by the total cash invested in the deal: down payment, closing costs, and initial repairs. The result is the yearly percentage yield on the actual money you put in, after the mortgage is paid, which makes it the standard way to compare leveraged rental deals against each other and against other income investments.

How do you calculate cash-on-cash return?

First total your cash invested: down payment plus closing costs plus upfront repairs. Then compute annual pre-tax cash flow: effective rent (after vacancy) plus other income, minus operating expenses and twelve months of mortgage payments. Divide cash flow by cash invested. For example, $4,300 of annual cash flow on $65,000 invested is a 6.6% cash-on-cash return.

What is a good cash-on-cash return?

Many investors target 8% to 12% on leveraged long-term rentals, and consider anything under 5% weak unless the market has strong appreciation. In the 2026 rate environment, honest underwriting on typical properties often lands at 3% to 6%, which is why investors increasingly hunt in lower-priced, higher-yield markets. Context matters: a 6% cash-on-cash with fast rent growth can beat a static 9%.

What is the difference between cash-on-cash return and cap rate?

Cap rate is property-level: NOI divided by price, with no mortgage, so any buyer computes the same number. Cash-on-cash is deal-level: cash flow after your specific mortgage, divided by your specific cash outlay. Use cap rate to compare properties and markets; use cash-on-cash to decide whether your financed deal actually pays you enough for the money you are locking up.

What is the difference between cash-on-cash return and ROI?

Cash-on-cash measures one year's cash flow against cash invested and ignores everything else. Total ROI counts all sources of profit over the full hold: cumulative cash flow, loan paydown, appreciation, and net sale proceeds. A property can show a modest 4% cash-on-cash yet deliver a strong total ROI once equity growth is counted, which is why the two metrics answer different questions.

How is cash-on-cash different from IRR?

IRR is time-weighted: it accounts for when every dollar goes out and comes in across the entire hold, including the sale. Cash-on-cash is a simple one-year snapshot with no time dimension. IRR is the institutional standard for comparing multi-year investments, but it requires projecting an exit; cash-on-cash needs only this year's numbers, which makes it the workhorse screening metric.

Does cash-on-cash return include mortgage principal paydown?

No. The mortgage payment subtracted from cash flow includes principal, but the equity that principal builds is not credited back. That is deliberate, cash-on-cash measures spendable cash yield only. On a typical 30-year loan, paydown adds roughly 1% to 3% of additional annual return in early years, which shows up in total ROI and IRR rather than cash-on-cash.

Why does the calculator ask for my mortgage payment directly?

Because most buyers already have a real payment from a lender quote or an existing loan, entering it directly is more accurate than re-deriving it from rate and term assumptions. It also handles unusual financing: seller carry, adjustable rates, interest-only periods, that a standard amortization formula would miss. If you want the calculator to build the payment for you, use the rental property calculator instead.

Can cash-on-cash return be negative?

Yes. If vacancy, operating expenses, and the mortgage exceed rental income, annual cash flow is negative, and so is the return, you are feeding the property monthly. Some investors accept mildly negative cash-on-cash in high-appreciation markets, but it is a speculation on growth, not income investing, and it deserves a clear-eyed decision rather than an optimistic vacancy assumption.

What cash-on-cash return do all-cash buyers get?

With no mortgage payment, cash flow is much higher, but the cash invested is the entire purchase price plus costs, so the percentage usually lands near the property's cap rate, typically 4% to 8%. Leverage is what pushes cash-on-cash above cap rate when the spread between cap rate and borrowing cost is positive; without debt, the two metrics converge.