Cash-on-Cash Return Calculator
Calculate cash-on-cash return on rental property.
Divides annual pre-tax cash flow by total cash invested — down payment, closing costs, and repair budget.
Cash-on-cash return (CoC) measures the annual pre-tax cash income you actually receive relative to the total cash you invested — not the property value, not the mortgage balance, just cash in vs. cash out. It is the most practical metric for rental property investors who use leverage (mortgages).
Formula: Cash-on-Cash Return (%) = (Annual Pre-Tax Cash Flow ÷ Total Cash Invested) × 100
Annual Pre-Tax Cash Flow: Cash Flow = Gross Rental Income − Vacancy Loss − Operating Expenses − Debt Service (mortgage payments)
Total Cash Invested: Cash Invested = Down Payment + Closing Costs + Initial Repairs + Reserves
Variable definitions:
- Gross Rental Income — total rent if 100% occupied for 12 months
- Vacancy Loss — typically 5–10% of gross rent (market dependent)
- Operating Expenses — property taxes, insurance, management fees (~8–12% of rent), maintenance, HOA
- Debt Service — annual principal + interest payments on any mortgage
- Down Payment — cash paid upfront (typically 20–25% for investment properties)
- Closing Costs — title, inspection, lender fees (~2–4% of purchase price)
CoC vs. Cap Rate — key distinction:
- Cap Rate ignores financing — useful for comparing properties on equal footing
- Cash-on-Cash includes your specific loan terms — measures YOUR actual return on YOUR cash
Benchmark targets:
- Below 4%: poor (index funds typically outperform)
- 4–7%: acceptable in high-appreciation markets
- 8–12%: solid performing rental property
- 12%+: excellent (usually in lower-cost markets or with value-add improvements)
Worked example: Purchase price: $250,000. Down payment (25%): $62,500. Closing costs: $4,500. Repairs: $3,000. Total Cash Invested = $70,000
- Monthly rent: $2,000 → Annual gross: $24,000
- Vacancy (7%): −$1,680
- Property taxes: −$2,500
- Insurance: −$1,200
- Management (10%): −$2,400
- Maintenance: −$1,200
- Mortgage P+I (6.5% on $187,500, 30yr): −$14,256/year
- Annual Cash Flow = $24,000 − $1,680 − $2,500 − $1,200 − $2,400 − $1,200 − $14,256 = $764
Cash-on-Cash = ($764 ÷ $70,000) × 100 = 1.09%
This example reveals the property barely cash-flows — a reminder to always run the full numbers before buying.