Cash-on-Cash Return Calculator

The cash-on-cash return is the levered sibling of cap rate: it measures the annual pre-tax cash flow a property generates against the actual cash you put in (down payment plus closing costs). Where cap rate ignores the mortgage, cash-on-cash centers it — because what matters to your wallet is the return on the money that left your pocket.

Enter the purchase price, financing, closing costs, rent and operating expenses above. The calculator computes annual and monthly cash flow, the cash-on-cash percentage, and the first-year equity you build through principal paydown. Everything runs in your browser — your numbers are never uploaded. For the unlevered view, see the cap rate calculator; for what a lender checks, the DSCR calculator.

What is cash-on-cash return?

Cash-on-cash = annual pre-tax cash flow ÷ total cash invested. If you put $90,000 into a deal and it throws off $9,000 a year after the mortgage and expenses, your cash-on-cash is 10%. It is the closest metric to “what am I earning on the cash I actually spent?”

cash-on-cash = annual pre-tax cash flow ÷ total cash invested
total cash invested = down payment + closing costs
annual pre-tax cash flow = NOI − annual debt service

How to calculate cash-on-cash

Compute net operating income the same way as cap rate (rent minus vacancy minus operating expenses), then subtract annual debt service (monthly P&I × 12) to get cash flow. Divide that by the total cash you put in.

NOI = gross operating income − operating expenses
annual debt service = monthly P&I × 12, where P&I = P·r(1+r)ⁿ ÷ ((1+r)ⁿ−1)
cash-on-cash = (NOI − debt service) ÷ (down payment + closing costs)

Cash-on-cash vs. cap rate

Cap rate is unlevered (no mortgage); cash-on-cash is levered. Leverage amplifies returns when the cap rate exceeds the borrowing rate, and hurts when it doesn’t. A property with a 6% cap rate financed at 7.25% will show a lower cash-on-cash than its cap rate — the mortgage costs more than the unlevered yield. That is why cash-on-cash can go negative while cap rate stays positive.

Why we add first-year equity

Cash-on-cash only counts cash in your pocket — but each mortgage payment also pays down principal, building equity you recover on a sale or refinance. Adding first-year principal payback to cash flow gives a “year-1 total return” closer to your real economic return (appreciation still aside). A deal that breaks even on cash flow can still be building meaningful equity, and a deal that cash-flows well while the loan barely amortizes is returning more of its yield as cash.

What is a good cash-on-cash return?

There is no universal benchmark, but many investors target roughly 8–12% on leveraged rentals, with anything above 10% considered strong and break-even deals near 0%. Set the calculator’s target to the return you require and let it flag the deal. Remember that cash-on-cash ignores appreciation, depreciation tax benefits, and principal paydown (which is why we surface equity separately) — it is one lens, not the whole picture. See the glossary for related terms.

Frequently asked questions

What is a good cash-on-cash return?

Many investors aim for roughly 8–12% on a leveraged rental. Above 10% is generally strong; 0% means the property breaks even on cash flow. Set the calculator’s target to what you require and let it flag the deal. Keep in mind cash-on-cash ignores appreciation, depreciation and equity build, so it understates total return.

Is cash-on-cash the same as ROI?

No. ROI (total return) includes appreciation, principal paydown and tax benefits; cash-on-cash counts only pre-tax cash flow against cash invested. Cash-on-cash is simpler and more conservative. The “year-1 total return” result here adds principal paydown to cash flow for a middle-ground view.

Does cash-on-cash include the mortgage?

Yes — that is the point. It subtracts debt service from NOI. The denominator is your own cash (down payment + closing costs), not the purchase price, so leverage is baked in on both the numerator and the denominator.

Why does my cap rate look fine but cash-on-cash is negative?

Because the mortgage costs more than the unlevered yield. When the cap rate (unlevered) is below your borrowing rate, leverage works against you and cash-on-cash falls below the cap rate — even negative while cap rate stays positive. The fixes: a larger down payment, a lower rate, a lower price, or higher rent.

Does this calculator upload my data?

No. All calculations run locally in your browser. The inputs never leave your device — confirm it in your browser’s network tab while editing the fields.