Cash-on-Cash Return Calculator
See what a year of rental cash flow earns on the cash you put in.
Details
= $75,000
Cash-on-cash return
24.05%
Monthly cash flow
$1,503
Cash invested
$75,000
Cap rate
12%
DSCR
2
Yearly cash per $100 in
$24.05
Break-even rent
$1,497
This works out the annual cash return on the money you actually put into a rental property, after the mortgage is paid.
Enter the purchase details, rent and expenses, and it returns the yearly cash flow and that cash flow as a percentage of your invested cash.
What cash-on-cash return measures
Cash-on-cash return is the cash you collect in a year divided by the cash you actually put in. It answers the only question that matters to your bank account: what is this deal paying me on my money?
Unlike cap rate, it includes the mortgage. Cap rate measures the property; cash-on-cash measures your deal, with your financing and your down payment.
That makes it the more personal of the two. The same building bought with different loans produces very different cash-on-cash returns, which is precisely the point of calculating it.
Cash invested is the down payment plus closing costs and any upfront repairs — the money that actually left your account, not the purchase price.
What to enter
- Purchase price and down payment
- The price, and how much of it you are paying in cash. The down payment is the largest part of your invested capital.
- Interest rate and loan term
- These set the mortgage payment, which is the difference between this and cap rate.
- Monthly rent
- Gross rent before vacancy and expenses.
- Vacancy and operating expenses
- Deducted to reach net operating income. Leaving these at zero produces a number that will not survive contact with reality.
What this assumes
Figures are for a stabilised year. The first year usually costs more, with turnover, repairs and letting fees.
Only cash flow is counted. Appreciation, loan paydown and tax benefits are real returns but are not in this number.
How to calculate cash-on-cash return
Work out the cash that actually arrives in a year, then divide by the cash that actually left.
- annual cash flow
- NOI minus the mortgage payments
- cash invested
- Down payment plus closing costs plus upfront repairs
Find the net operating income. Gross rent, minus vacancy, minus operating expenses. Not minus the mortgage.
Subtract the mortgage payments. Twelve months of principal and interest. What is left is your cash flow.
Add up the cash you invested. Down payment, closing costs, and any work done before it could be let.
Divide and convert. Cash flow divided by cash invested, times 100.
See a worked example: a $400,000 rental that loses money each year
- Price
- $400,000, 25% down
- Loan
- $300,000 at 6.5% over 30 years
- Rent
- $2,500 a month
- Vacancy / expenses
- 6% and 35% of gross rent
Gross rent: $30,000. After 6% vacancy and 35% expenses, NOI is $17,700.
Mortgage: $1,896.20 a month, so $22,754 a year.
Cash flow: $17,700 − $22,754 = −$5,054.
Cash invested: $100,000 down plus about $12,000 closing = $112,000.
Cash-on-cash: −$5,054 ÷ $112,000 = −4.51%. This deal costs you $421 a month to own.
−4.51%, a negative return
Frequently asked questions
Many investors look for 8% or more, though what is achievable depends heavily on the market and the interest-rate environment.
In expensive metros, positive cash flow at all can be difficult, and buyers there are often betting on appreciation instead. That is a different strategy with different risks, and it should be a deliberate choice rather than an accident.
[Cap rate](/real-estate/cap-rate-calculator) ignores financing and divides NOI by the full property value. Cash-on-cash includes the mortgage and divides by the cash you actually invested.
Cap rate asks whether the building is good. Cash-on-cash asks whether your deal is good. The same property can look fine on one and poor on the other.
Almost always negative leverage: your mortgage rate is higher than the property's cap rate. Borrowing at 6.5% against an asset yielding 4.4% loses money on every borrowed dollar.
In that situation more debt makes the return worse, not better. Either a larger down payment, a lower price, or higher rent is needed to fix it.
No, and that is a real limitation. It measures only the cash arriving this year.
Loan paydown, appreciation and tax treatment are genuine returns that this figure ignores entirely. For the fuller picture over a holding period, use the rental property ROI calculator.
Everything that left your account to acquire and ready the property: down payment, closing costs, inspection, and any repairs needed before letting it.
It is not the purchase price. Using the price instead understates your return substantially, since the lender supplied most of it.
Problems people actually run into
Negative leverage hiding behind a low down payment
Putting less down is usually framed as improving returns, and it does when the property out-earns the loan. When it does not, a smaller down payment makes the loss per dollar worse.
The test takes seconds: compare the cap rate against the mortgage rate. Cap rate higher means borrowing amplifies your return. Cap rate lower, as in the example above, means it amplifies your loss.
Running the numbers with no vacancy or repairs
A spreadsheet with 100% occupancy and no maintenance turns almost any property into a good deal. It is also the most common way people talk themselves into a bad one.
Include 5-8% vacancy, a management fee even if you self-manage, and a real repairs allowance. In the example, those deductions are the entire difference between a deal that looks fine and one that costs $421 a month.
Results are estimates for general information only and are not professional financial, medical, or legal advice. Read our full disclaimer.
Last updated: September 4, 2026