Cash-on-Cash Return Calculator
Measure the annual cash return on the cash you actually invested.
Results update as you type.
This calculator is for illustrative purposes only. Actual rates, fees and terms vary by lender. Consult a qualified financial adviser before making borrowing decisions.
How it works
Cash-on-cash return is the metric leveraged real estate investors care about most, because it answers a personal question: how much cash does this deal put back in my pocket each year for every dollar I actually invested? A cash-on-cash return calculator divides the property's annual pre-tax cash flow by the total cash you committed, including down payment, closing costs, and any upfront repairs, then expresses the result as a percentage you can compare against other uses of your money. What separates this measure from cap rate is financing. Cap rate treats a property as if bought outright, but almost no investor pays all cash. Cash-on-cash return counts only the money you personally sank into the deal, so a mortgage that lets you control a large asset with a modest down payment can lift the percentage well above the property's unleveraged yield. That is the power, and the risk, of leverage made visible in a single number. The calculation works because it ties the reward directly to your own capital at stake, letting you compare a rental against a stock portfolio, a bond, or a different property on equal terms. It is a first-year snapshot rather than a lifetime return, ignoring appreciation, loan paydown, and tax benefits, but it is the clearest gauge of immediate cash efficiency. Investors use it to judge whether a deal's cash flow justifies tying up their capital rather than deploying it elsewhere.
Cash-on-cash return = annual pre-tax cash flow ÷ total cash invested × 100
Dividing the yearly cash flow the property produces by the actual cash you put in measures how hard your own money is working, expressed as a percentage. Unlike cap rate, which ignores financing, this ratio counts only the dollars you personally committed, so a mortgage that reduces your upfront outlay can raise the return. It reflects leverage directly: borrowing more lowers the cash invested and can magnify the percentage, for better or worse.
Source:Standard real estate formula
We review all our tools from time to time to ensure accuracy.
Worked example
How to use this calculator
- 1
Enter your values
Enter annual pre-tax cash flow and total cash invested.
- 2
Adjust the options
Fine-tune any options to match your situation.
- 3
Read your result
Cash-on-cash return updates instantly as you type — no button to press.
Frequently asked questions
What counts as cash invested?
Include every dollar you put into the deal upfront: the down payment, closing costs, loan fees, and any immediate repairs or renovations needed to make the property rentable. It excludes the portion of the purchase financed by your mortgage, since that is the lender's money, not yours. Adding all your out-of-pocket costs gives an accurate denominator, so the return reflects the true efficiency of your own capital.
How is cash-on-cash return different from ROI?
Cash-on-cash return measures only annual cash flow against the cash you invested, giving a clean yearly yield. Broader return on investment often folds in appreciation, loan principal paydown, and tax effects, producing a fuller but more complex picture. Cash-on-cash is favoured for its simplicity and focus on real spendable income, while total ROI better captures long-term wealth building. Both are useful for different questions.
What is a good cash-on-cash return?
Expectations vary by strategy and market, but many rental investors target somewhere between 8% and 12%, judging deals against alternatives like stocks or bonds. A higher figure is more attractive but may carry more risk or a tougher location. Because financing and local conditions shift the number, compare a property's cash-on-cash return against your own required return and other deals you could pursue rather than a fixed threshold.
Does the calculator include my mortgage?
Indirectly, and that is the point. The annual pre-tax cash flow you enter should already subtract your mortgage payments along with all operating expenses, so financing costs are baked into the numerator. Meanwhile the cash invested reflects only your down payment and upfront costs, not the loan. This is precisely why cash-on-cash return captures the effect of leverage, unlike cap rate, which ignores debt entirely.
Why does leverage change the return so much?
Borrowing lets you control a large, income-producing asset with a small slice of your own cash. Because the return divides cash flow by only that slice, a smaller down payment can sharply raise the percentage, as long as the property still cash flows after the loan payment. Leverage cuts both ways, though: if cash flow turns negative, the same math magnifies losses, so higher leverage means higher risk alongside higher potential return.