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Cash-on-Cash Return Calculator

Calculate cash-on-cash return and compare leverage scenarios

Cash-on-Cash Return

-0.10%

Annual Cash Flow

-$83

NOI

$17,880

Cash Invested

$81,000

$
%
$
$
$
%
$
%

Cash-on-Cash Return

-0.10%

Annual Cash Flow

-$83

Monthly Cash Flow

-$7

Total Cash Invested

$81,000

NOI

$17,880

Leveraged vs All-Cash

Leveraged

-0.10%

CoC Return

Cash in$81,000
Cash flow-$83/yr

All-Cash

5.84%

Return

Cash in$306,000
Cash flow$17,880/yr
All-cash gives 5.9 percentage points higher return

Cash Flow Breakdown

Effective Rent (after vacancy)$25,080/yr
Operating Expenses-$7,200/yr
= NOI$17,880/yr
Mortgage Payment-$17,963/yr
= Annual Cash Flow-$83/yr

Frequently Asked Questions

Q

How do you calculate cash-on-cash return?

Cash-on-Cash Return = Annual Pre-Tax Cash Flow / Total Cash Invested x 100. If you invest $81,000 (down payment + closing costs) and receive $6,264 annual cash flow: CoC = $6,264 / $81,000 x 100 = 7.73%. This measures return on actual dollars invested.

  • Annual Cash Flow = NOI minus annual mortgage payments
  • Total Cash Invested = Down payment + closing costs + rehab
  • Does NOT include appreciation or principal paydown
  • Measures actual cash return on cash deployed
  • Example: $67,500 cash in, $2,580/yr cash out = 3.82% CoC
Cash InvestedAnnual Cash FlowCoC Return
$75,000 (25% down)$6,2648.35%
$81,000 (25% + costs)$6,2647.73%
$306,000 (all cash)$18,6006.08%
Q

What is a good cash-on-cash return for rental property?

Most investors target 8-12% cash-on-cash return. Below 5% is generally poor unless in an appreciation market. Above 12% is excellent. In high-cost markets (coastal cities), 4-6% may be acceptable when factoring in appreciation potential.

  • 8-12% is the most common investor target range
  • Compare to stock market average (~10% before inflation)
  • CoC does not capture appreciation or equity buildup
  • High CoC properties often have lower appreciation
  • Consider total return (CoC + appreciation + paydown)
CoC ReturnRatingTypical MarketStrategy
< 5%PoorHigh-cost coastalAppreciation play
5-8%AcceptableSuburban metrosBalanced
8-12%GoodSecondary marketsCash flow focus
12%+ExcellentMidwest/SouthStrong cash flow
Q

How does leverage affect cash-on-cash return?

Leverage amplifies returns when the property earns more than the loan costs. A $300,000 property earning 6% NOI with a 7% mortgage: all-cash CoC = 6.08%, but leveraged (25% down) CoC = 7.73% because less cash is tied up despite mortgage payments.

  • Positive leverage: Property return > mortgage rate = amplified CoC
  • Negative leverage: Property return < mortgage rate = reduced CoC
  • More leverage = higher CoC but also higher risk
  • All-cash eliminates mortgage risk but ties up more capital
  • Consider what the remaining capital could earn elsewhere
ScenarioCash InAnnual Cash FlowCoC Return
All Cash$306,000$18,6006.08%
25% Down$81,000$6,2647.73%
20% Down$66,000$4,0926.20%
Q

What is the difference between cash-on-cash return and cap rate?

Cap rate measures unlevered return on total property value (NOI / Value). Cash-on-cash measures return on your actual cash invested after mortgage payments. Cap rate is financing-independent; CoC changes with your loan terms.

  • Cap rate: Same for all buyers regardless of financing
  • CoC return: Varies based on your loan terms and down payment
  • Same property, same cap rate, different CoC for each buyer
  • Use cap rate to compare properties, CoC to evaluate deals
MetricFormulaIncludes Debt?Use Case
Cap RateNOI / Property ValueNoProperty comparison
Cash-on-CashCash Flow / Cash InvestedYesPersonal return
Gross YieldAnnual Rent / PriceNoQuick screening
Q

What costs are included in total cash invested?

Total cash invested includes: down payment, closing costs (2-5% of purchase price), inspection fees, appraisal fees, and any rehab or repair costs before renting. It does NOT include ongoing expenses or future capital expenditures.

  • Down payment: 20-25% of purchase price typical for investment
  • Closing costs: $5,000-$15,000 (lender fees, title, escrow)
  • Inspection and appraisal: $500-$1,000
  • Initial repairs or rehab to make rent-ready
  • Do not include monthly expenses or future capex

Example Calculations

1$250,000 Rental with 25% Down at 6.5%

Inputs

Purchase Price$250,000
Down Payment25% ($62,500)
Closing Costs$5,000
Monthly Rent$2,000
Vacancy5%
Monthly Expenses$500
Loan Rate6.5% / 30 years

Result

Cash-on-Cash Return3.82%
Annual Cash Flow$2,580
NOI$16,800
All-Cash Return6.59%

Effective rent = $2,000 x 12 x 0.95 = $22,800. Expenses = $500 x 12 = $6,000. NOI = $22,800 - $6,000 = $16,800. Loan = $187,500 at 6.5%/30yr, monthly payment = $1,185. Annual debt service = $14,220. Cash flow = $16,800 - $14,220 = $2,580. Cash invested = $62,500 + $5,000 = $67,500. CoC = $2,580 / $67,500 = 3.82%. All-cash return = $16,800 / $255,000 = 6.59%.

2$200,000 Property with $10,000 Rehab

Inputs

Purchase Price$200,000
Down Payment25% ($50,000)
Closing Costs$4,000
Rehab Costs$10,000
Monthly Rent$1,800
Vacancy5%
Monthly Expenses$400
Loan Rate6.5% / 30 years

Result

Cash-on-Cash Return6.78%
Annual Cash Flow$4,342
NOI$15,720
All-Cash Return7.35%

Effective rent = $1,800 x 12 x 0.95 = $20,520. Expenses = $400 x 12 = $4,800. NOI = $20,520 - $4,800 = $15,720. Loan = $150,000 at 6.5%/30yr, monthly payment = $948. Annual debt service = $11,378. Cash flow = $15,720 - $11,378 = $4,342. Cash invested = $50,000 + $4,000 + $10,000 = $64,000. CoC = $4,342 / $64,000 = 6.78%. All-cash return = $15,720 / $214,000 = 7.35%.

Formulas Used

Cash-on-Cash Return

CoC Return = (Annual Pre-Tax Cash Flow / Total Cash Invested) x 100

Measures the annual return on actual cash invested in a rental property, after debt service.

Where:

CoC Return= Cash-on-cash return percentage
Annual Pre-Tax Cash Flow= NOI minus annual mortgage payments
Total Cash Invested= Down payment + closing costs + rehab costs

Annual Cash Flow

Cash Flow = NOI - Annual Debt Service

The actual cash remaining after all operating expenses and mortgage payments.

Where:

Cash Flow= Annual pre-tax cash flow
NOI= Net Operating Income (effective rent - expenses)
Annual Debt Service= Monthly mortgage payment x 12

Monthly Mortgage Payment

M = P x r(1+r)^n / ((1+r)^n - 1)

Standard amortization formula for the monthly mortgage payment on the loan amount.

Where:

M= Monthly mortgage payment
P= Loan amount (purchase price - down payment)
r= Monthly interest rate (annual rate / 12)
n= Total number of payments (years x 12)

Understanding Cash-on-Cash Return

Cash-on-cash return is the most practical metric for rental property investors because it measures what you actually earn on the cash you deploy. Unlike cap rate, it accounts for your specific financing.

Our calculator computes CoC return and compares leveraged versus all-cash scenarios side by side. This comparison reveals whether leverage is helping or hurting your returns given current interest rates.

Remember that CoC is only one component of total return. Appreciation, mortgage principal paydown, and tax benefits also contribute to real estate investment returns over time.

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Last Updated: Mar 25, 2026

This calculator is provided for informational and educational purposes only. Results are estimates and should not be considered professional financial, medical, legal, or other advice. Always consult a qualified professional before making important decisions. UseCalcPro is not responsible for any actions taken based on calculator results.

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