About the Cash on Cash Return Calculator
This cash on cash return calculator shows how hard your own money is working in a rental property. It builds the deal from the purchase price, down payment, closing costs and upfront repairs, works out the mortgage payment, and subtracts it along with vacancy and operating expenses from the rent. The yearly cash flow that is left is divided by the total cash you put in.
Investors use cash-on-cash return to compare a financed rental with other uses of the same cash — a bigger down payment, a second property, or an index fund. The chart shows how the return changes as you put more or less money down, which makes the effect of leverage easy to see.
The figure is a first-year, pre-tax number. It ignores appreciation, tax benefits such as depreciation, and the principal you pay down each month, which is shown separately as part of a year-one total return. Rent and expenses are treated as flat for the year.
With the default inputs, the cash on cash return is 5.75%. Change any value above to recalculate instantly.
How to use the cash on cash return calculator
- 1Enter the purchase price, down payment percentage, closing costs and any upfront repairs.
- 2Enter the mortgage rate and term (set the down payment to 100% for an all-cash purchase).
- 3Add the expected monthly rent and a vacancy allowance.
- 4Add monthly operating expenses such as tax, insurance, repairs and management.
- 5Read the cash on cash return and use the chart to test different down payments.
Formula and method
Annual pre-tax cash flow is twelve months of rent after the vacancy allowance, minus monthly operating expenses and the mortgage principal-and-interest payment. The payment uses the standard amortization formula on the loan amount (price minus down payment) at the chosen rate and term.
Total cash invested is the down payment plus closing costs plus any upfront repairs — the money that actually left your bank account. The year-1 total return adds the principal you pay down in the first twelve months, since that builds equity even though it is not spendable cash.
- CF
- Annual cash flow = (rent × (1 − vacancy) − expenses − P&I) × 12
- Cash
- Down payment + closing costs + rehab
- P&I
- Monthly mortgage principal and interest
Worked examples
$250k rental with 20% down at 7%
You invest $50,000 down plus $7,500 closing and $5,000 repairs, $62,500 in total. Rent after 5% vacancy is $2,280; subtracting $650 of expenses and a $1,330.60 mortgage leaves about $299 a month, or $3,593 a year — a 5.75% cash on cash return.
Same property bought with cash
With no mortgage, all $19,560 of NOI is cash flow, but you have $262,500 tied up. The return rises to 7.45% on a much larger sum — leverage lowered the percentage here because a 7% loan costs roughly what the property yields.
$400k duplex, 25% down at 6.5%
A $300,000 loan at 6.5% costs $1,896.20 a month. Rent of $3,300 less 5% vacancy is $3,135; after $900 of expenses and the mortgage, cash flow is about $339 a month, or $4,066 a year, on $110,000 invested — a 3.7% return, below the 6.7% cap rate because the loan costs more than the property yields.
Frequently asked questions
What is a good cash on cash return?+
Many rental investors look for 8%–12% cash on cash, but acceptable returns depend on the market, interest rates and how much appreciation you expect. In expensive coastal markets 3%–5% is common; in cash-flow markets investors often demand 10% or more.
How is cash on cash return different from ROI?+
Cash on cash return only counts the cash that flows to you in a year. A broader ROI can include principal paydown, appreciation and tax benefits, and is often measured over the whole holding period rather than one year.
Should closing costs be included in cash invested?+
Yes. Closing costs, loan points, inspections and upfront repairs are all cash you had to spend to own the property, so they belong in the denominator. Leaving them out overstates your return.
Why can cash on cash be lower with a loan?+
Leverage only boosts returns when the property’s cap rate is higher than your loan’s cost. If the mortgage rate is roughly equal to or above the cap rate, borrowing increases your payment faster than it reduces the cash you invest.
Is cash on cash return before or after tax?+
It is normally quoted before income tax. Rental depreciation often shelters much of the cash flow from tax, so the after-tax return can be similar or even higher, but that depends on your personal situation.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.