Cash-on-Cash Return Calculator
Calculate cash-on-cash return from annual cash flow and total cash invested. The standard leveraged-return metric for rental real estate deals.
Net operating income. Use the output of the cap rate calculator or your own pro forma.
12-month total of principal + interest payments. Exclude escrowed property tax and insurance, which are already in NOI.
Typically 2-5% of purchase price.
Capital required to make the property rent-ready or execute a value-add plan.
About this tool
Cash-on-cash return is what cap rate is not: it factors in the loan. Where cap rate asks "what does the property yield unleveraged," cash-on-cash asks "what does my cash in the deal yield after the mortgage eats its share of NOI." For investors who put down 20-25% and finance the rest, cash-on-cash is usually the more relevant decision metric because it matches how the investor actually holds the deal. It is the number that answers "what is my first year's return on the check I wrote."
This calculator does the straightforward math. Enter the annual NOI (from the cap rate tool or your own pro forma), annual debt service (mortgage principal plus interest, excluding escrowed tax and insurance which are already in NOI), and the three components of cash invested: down payment, closing costs, and any renovation or value-add capital spent at closing. The output shows annual cash flow, monthly cash flow, total cash invested, and cash-on-cash return.
The number that ends up on the screen depends entirely on what you feed the tool. Use optimistic NOI (no vacancy, no management, no reserves) and you inflate the return. Omit renovation and you inflate it further. A stated 10% cash-on-cash in a broker pro forma routinely becomes 5-7% under honest underwriting. See the cap rate calculator for the unleveraged sibling metric.
How it works
Annual cash flow = NOI - annual_debt_service. NOI comes from the cap rate analysis (gross rent × (1 - vacancy) - opex). Annual debt service is the 12-month total of principal and interest payments on the mortgage. Do NOT include escrowed property tax and insurance in debt service; those are already subtracted from NOI on the expense side.
Total cash invested = down_payment + closing_costs + renovation. Down payment is the equity portion of the purchase. Closing costs typically run 2-5% of the purchase price and include loan origination, title insurance, appraisal, attorney fees, and recording fees. Renovation is any capital required upfront to make the property rent-ready or execute the value-add plan.
Cash-on-cash return = annual_cash_flow / total_cash_invested × 100. Simple formula; the rigor is in what you put into each input.
Examples
Mid-market single-family rental with 20-25% down and modest renovation. $800/month of cash flow and a 10.91% cash-on-cash return is the shape of a solid first-year deal at today's rates.
A duplex with moderate value-add work. $16,000 annual cash flow and 9.41% cash-on-cash on $170k invested. Second-year return typically improves as the post-renovation rent bump shows up.
Coastal fourplex with high leverage. NOI $72k and debt service $60k leaves $12k of cash flow. Positive, not negative as an earlier version of this tool incorrectly stated. Cash-on-cash of 3.43% on $350k invested is modest because the cap rate is already low; leverage stops amplifying returns when cap rate approaches the loan constant.
When to use
Use this to evaluate a financed rental deal before closing, or to compare two deals with different capital structures. For all-cash purchases, cash-on-cash and cap rate converge (debt service = 0, cash invested = price + reno). For heavily leveraged purchases, cash-on-cash diverges from cap rate and becomes the decision-relevant number. Pair with the rental property depreciation tool for the tax side and with rent vs buy if you are considering living there instead of renting it out.
Related concepts
- IRS Publication 527 (Residential Rental Property) : Federal tax framework for rental income reporting
Frequently asked questions
Why not include principal paydown in the return?
Cash-on-cash measures first-year cash yield, not total return. Principal paydown is equity you build but do not see until you sell or refinance. A separate metric, equity multiple or IRR, captures it. Cash-on-cash is the "what do I take home this year" number.
Should I include property appreciation?
No. Appreciation is a separate line item in total-return analysis. Mixing it with cash-on-cash inflates the metric and hides risk. If you want total return including appreciation, compute IRR over your expected hold period instead.
What if the deal has negative cash flow?
The calculator shows a negative percentage. Negative cash flow is common in high-price coastal markets where appreciation is the primary return driver. Investors accept negative first-year cash flow if they believe appreciation will more than compensate. That is a riskier strategy and worth calling out explicitly.
Sources
- IRS Publication 527 (Residential Rental Property)
(primary, accessed Apr 16, 2026)
Federal income-tax treatment of rental operations, relevant to the NOI-to-cash-flow bridge.
Related tools
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Compare total cost of owning vs renting over a holding period, with local appreciation, property tax, maintenance, and net-of-equity adjustments.
Cap Rate and NOI Calculator
Calculate net operating income and cap rate for a rental property from gross rent, vacancy, and operating expenses. Standard CRE valuation formula.
Rental Property Depreciation Schedule
Year-by-year MACRS 27.5-year straight-line depreciation schedule for a residential rental property, with land value excluded from the depreciable basis.