Cash-on-Cash Return Calculator
Calculate annual cash-on-cash return by comparing the property's yearly pre-tax cash flow to the total cash invested. A popular metric used by real estate investors to evaluate rental performance.
Annual pre-tax cash flow after all operating expenses and loan EMI.
Includes down payment, closing costs, renovation costs, and initial reserves.
You may also like:
Cash-on-Cash Return Calculator – A Practical Metric for Real Estate Investors
Cash-on-cash return is one of the most practical and widely used performance metrics in real estate investing. It measures how efficiently your actual cash investment generates annual income. Unlike metrics that rely on total property value or theoretical returns, cash-on-cash return focuses on what most investors truly care about: how much money they put in versus how much money they get back each year in cash flow.
This Cash-on-Cash Return Calculator helps you quickly estimate that return by comparing annual pre-tax cash flow with the total cash invested in a property. It is commonly used by residential landlords, commercial real estate investors, BRRR investors, and anyone evaluating leveraged rental properties.
What Is Cash-on-Cash Return?
Cash-on-cash return expresses the annual cash income generated by a property as a percentage of the actual cash invested. It answers a simple question: “How hard is my invested cash working for me each year?”
Because most real estate investments involve leverage (mortgages or loans), cash-on-cash return provides a more realistic picture of investor-level performance than metrics based solely on property value.
Cash-on-Cash Return Formula
Cash-on-Cash Return (%) = (Annual Cash Flow ÷ Total Cash Invested) × 100
Where:
- Annual Cash Flow: Rental income remaining after operating expenses and loan payments (before income tax)
- Total Cash Invested: Down payment, closing costs, renovations, furnishing, and initial reserves
Example: Cash-on-Cash Return Calculation
Example Scenario:
Annual Cash Flow: 120,000
Total Cash Invested: 1,500,000
Cash-on-Cash Return = (120,000 ÷ 1,500,000) × 100 = 8%
This means the investor earns an annual return of 8% on the cash invested, excluding appreciation and tax benefits.
Why Investors Use Cash-on-Cash Return
Cash-on-cash return is especially useful when comparing leveraged investments. Two properties with identical net operating income can produce very different cash-on-cash returns depending on financing terms, down payment size, and interest rates. This makes the metric ideal for evaluating how debt affects real-world performance.
Investors often use cash-on-cash return to set minimum deal criteria. For example, some may target a minimum 8–12% cash-on-cash return for residential rentals, while others accept lower returns in exchange for appreciation potential or market stability.
Typical Cash-on-Cash Return Benchmarks
- Low-risk or premium markets: 4% – 7%
- Stable rental investments: 7% – 12%
- Higher-risk or value-add deals: 12% – 20%+
These ranges vary by country, interest rate environment, property type, and market cycle. Returns should always be evaluated alongside risk.
What Cash-on-Cash Return Does Not Capture
While extremely useful, cash-on-cash return has limitations. It does not account for property appreciation, loan principal paydown, tax benefits, or future rent growth. A deal with a lower cash-on-cash return may still outperform over the long term if appreciation and equity growth are strong.
Because of this, experienced investors use cash-on-cash return together with other metrics rather than relying on it alone.
Cash-on-Cash Return vs Other Real Estate Metrics
- Cap Rate: Measures return based on property value and NOI
- NOI: Shows operating profitability before financing
- IRR: Evaluates total return over the holding period
- Cash Flow: Measures actual money left each month
Cash-on-cash return fills a unique role by focusing strictly on the efficiency of invested capital.
Who Should Use This Calculator
This calculator is ideal for rental property investors, first-time buyers, portfolio landlords, BRRR investors, real estate agents, and analysts who want a quick, standardized way to assess cash efficiency. It is especially useful when comparing multiple financing scenarios or evaluating how changes in down payment or interest rate affect returns.
All calculations are performed locally in your browser. No personal or financial data is stored or transmitted. This tool is intended for educational and planning purposes and should be used alongside professional advice and comprehensive financial analysis.
Frequently Asked Questions
What is cash-on-cash return?
It is the annual pre-tax cash flow divided by the total cash invested, expressed as a percentage. It measures how efficiently invested cash generates income.
What counts as cash invested?
Cash invested includes down payment, closing costs, renovation expenses, and any initial reserves required to make the property operational.
Can cash-on-cash return be negative?
Yes. If annual cash flow is negative because expenses and loan payments exceed rental income, the resulting cash-on-cash return will also be negative.
Does this calculator store my data?
No. All calculations run locally on your device and nothing is saved or transmitted.