ROI Math

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Cash on Cash Return Calculator

A cash on cash return calculator measures the annual cash yield on the money you actually invest in a rental property, after mortgage payments and capital reserves. Add your down payment, closing costs, initial repairs, interest rate, and loan term below to see cash-on-cash return, monthly cash flow, and total cash invested — free and with no sign-up.

Last updated 2026-06-21

Investment Return Calculator
Live NOI, cap rate, financing, and cash-flow underwriting.
$2,365/mo
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Annual total: $42,000

Advanced
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yr
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Total cash invested
$253,000
Monthly debt
$4,135
Monthly cash flow
$2,365
Cash on cash
11.22%

Income allocation

Gross income, expenses, and net return split.

Operating expenses$42,000
Debt service$49,618
Capital reserve$6,000
Net cash flow$28,382
Loan amount
$637,500
Total cash invested
$253,000
Annual cash flow
$28,382

Cash-on-cash return formula

Cash-on-cash return equals annual pre-tax cash flow divided by total cash invested:

Cash-on-cash = (Annual cash flow ÷ Cash invested) × 100

Annual cash flow is NOI minus mortgage debt service and the annual capital reserve. Total cash invested includes the down payment, closing costs, and initial repairs or reserves. A $12,000 annual cash flow on $120,000 of total cash invested is a 10.0% cash-on-cash return.

How leverage changes your return

Adjusting the interest rate, loan term, or down payment updates debt service and shows how leverage shifts monthly cash flow. Borrowing can amplify returns when the property's cap rate exceeds the loan's cost, and erode them when it does not.

Because it accounts for financing, cash-on-cash return is most useful for evaluating a specific deal structure rather than comparing properties head-to-head.

How to calculate cash-on-cash return in 3 steps

  1. Subtract operating expenses from gross annual income to get NOI.
  2. Subtract annual mortgage debt service from NOI to get annual cash flow, then subtract the annual capital reserve.
  3. Divide annual cash flow by total cash invested (down payment plus closing costs and upfront repairs or reserves) and multiply by 100.

Frequently asked questions

What is cash-on-cash return?

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Cash-on-cash return is annual pre-tax cash flow divided by total cash invested, expressed as a percentage. Total cash invested commonly includes the down payment, closing costs, and upfront repairs or reserves. Annual cash flow is calculated after mortgage debt service and the annual capital reserve.

How do you calculate cash-on-cash return?

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Divide annual pre-tax cash flow by total cash invested, then multiply by 100. For example, $12,000 of annual cash flow divided by $120,000 of total cash invested — a $100,000 down payment, $12,000 of closing costs, and $8,000 of upfront repairs and reserves — is a 10% cash-on-cash return.

What is a good cash-on-cash return?

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Many rental investors target a cash-on-cash return of 8% to 12%, though acceptable ranges vary by market and strategy. Some investors accept lower cash-on-cash returns (4%-7%) in appreciating markets, while value-add or higher-risk deals may aim for 12%+. The right target depends on your goals and alternatives.

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

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Cap rate measures unleveraged income yield on the full purchase price and ignores financing. Cash-on-cash return measures the leveraged cash yield on only the cash you invest, after mortgage debt service. Use cap rate to compare assets and cash-on-cash to evaluate how a specific loan affects your return.

How does the down payment affect cash-on-cash return?

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A larger down payment reduces the loan balance and monthly debt service, which raises monthly cash flow but also increases the cash invested in the denominator. As a result, cash-on-cash return does not always improve with a bigger down payment — leverage can raise returns when the cap rate exceeds the loan's cost.

What should I include in total cash invested?

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Include the down payment, buyer closing costs, and cash spent before the property is ready to operate, such as initial repairs and operating reserves. Do not include financed amounts. Adding these costs prevents cash-on-cash return from being overstated.

This cash-on-cash return calculator is for educational estimates only and is not financial or investment advice. Confirm acquisition costs, financing terms, ongoing reserves, and tax treatment during full due diligence.