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Cash on cash return calculator

Enter the deal the way you actually think about it — price, down payment, rate, monthly rent — and get the year-one cash on cash return instantly. No annualizing by hand, no spreadsheets.

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Year-one yield on the cash you actually put in
01The deal
02Monthly income & costs
0.00%
Cash on cash return (year 1)
$0Monthly cash flow
$0Annual cash flow
$0Mortgage payment / mo
$0Total cash invested
Pre-tax, year-1, closing costs estimated at 2% of price. Nothing you type leaves your browser.

The cash on cash return formula

The cash on cash return (also called cash yield or CoC) answers one question: for every dollar of my own money locked in this deal, how many dollars of spendable income does it throw off each year? It is the metric leveraged investors quote to each other, because it is measured on actual cash at risk — not on the whole property value.

CoC % = Annual pre-tax cash flow ÷ Total cash invested × 100

The formula in full: annual pre-tax cash flow = (monthly rent + other monthly income − monthly operating expenses − monthly mortgage payment) × 12. Total cash invested = down payment + closing costs + upfront renovation. Cash on cash return = annual pre-tax cash flow ÷ total cash invested × 100.

A worked example you can verify by hand. Purchase price $300,000 with 20% down ($60,000), a 30-year loan at 6.5% on $240,000 gives a monthly payment of $1,517. Monthly rent $2,400 and other income $50, minus $500 of operating expenses and the $1,517 payment, leaves $433 of monthly cash flow — $5,196 per year. Add roughly 2% closing costs ($6,000) and the total cash invested is $66,000. That is a 7.87% cash on cash return.

CoC vs Cap Rate — the difference that matters

Cap rate and cash on cash return get mixed up constantly because both are yields expressed as percentages, but they answer different questions. Cap rate = net operating income ÷ property value, with no financing anywhere in the math. It is a property metric: two investors buying the same building with different loans get the same cap rate.

Cash on cash = annual cash flow after debt service ÷ cash invested. It is a deal metric: the same two investors get very different CoC returns, because the one using a cheap 30-year fixed mortgage is levered differently from the one paying cash. When the cap rate exceeds your mortgage constant (annual debt service ÷ loan balance), leverage amplifies your return — that is positive leverage, the whole engine of rental investing.

Cap RateCash on Cash
FormulaNOI ÷ property valueCash flow after debt ÷ cash invested
Includes financing?NoYes
AnswersIs this a good property?Is this a good deal for my money?
Same for every buyer?YesNo — depends on your loan

What is a good cash on cash return?

Context for the number this calculator shows. Against the 10-year Treasury (historically 3-5%) a rental property should clear noticeably more, because you are taking on vacancy risk, maintenance shocks, illiquidity, and management effort. Against leveraged stock portfolios on margin, a good rental CoC is comparable or better with hard-asset backing.

The output bands used in this calculator's verdict: 8% and above is a solid income yield, 5-8% is workable — common in appreciation-heavy coastal markets where you accept thinner cash flow for equity growth, and under 5% is thin: you are effectively subsidizing the tenant while betting on appreciation. None of these bands is a law; they are the consensus bands you will hear from most 2026-era residential investors.

Straight answers

What is the cash on cash return formula?

Cash on cash return = annual pre-tax cash flow divided by total cash invested, expressed as a percentage. Annual pre-tax cash flow is your rental income plus any other income, minus operating expenses and mortgage payments for the year. Total cash invested is everything you paid out of pocket: the down payment, closing costs, and any upfront renovation. For example, if a property generates $6,000 of annual cash flow and you put $75,000 of cash into the deal, your cash on cash return is 8%. This calculator applies the formula automatically from monthly inputs, since landlords usually think in monthly rent and monthly costs.

What is a good cash on cash return?

Most experienced residential investors treat 8% as a solid cash on cash return in 2025-2026 markets, with 5-8% considered workable in appreciation-heavy metros and anything under 5% thin unless you are banking on appreciation or debt paydown. The classic old rule of thumb was the 2% rule (monthly rent = 2% of purchase price), which in practice almost never holds in today's coastal markets but still appears in some Midwest and Southern markets. Compare your result against the 10-year Treasury yield plus a risk premium: rental real estate carries vacancy, maintenance, and illiquidity risk that a Treasury does not.

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

Cap rate measures the property's unlevered yield: net operating income (NOI) divided by property value, ignoring financing entirely. Cash on cash return measures your levered yield: annual cash flow after mortgage payments divided by the cash you actually invested. Cap rate answers 'is this a good property'; cash on cash answers 'is this a good deal for my money at this financing'. That is why a 6% cap rate property can deliver a 10% cash on cash return when your mortgage constant is below the cap rate (positive leverage) — or a 2% cash on cash return when debt is expensive.

Does cash on cash return include mortgage payments?

Yes. The numerator (annual pre-tax cash flow) is calculated after all debt service — principal and interest on your loan are subtracted from income along with operating expenses. That is exactly what distinguishes it from cap rate, which uses net operating income before financing. The denominator, total cash invested, includes your down payment but not the loan amount: only cash actually out of pocket counts.

Does this calculator account for taxes, vacancy, and CapEx?

Vacancy and any allowance for repairs, capital expenditures, property management and insurance should be entered inside the monthly operating expenses field — a common approach is 35-50% of gross rent for all-in operating costs before debt service. Income taxes and depreciation are deliberately excluded, because cash on cash return is a pre-tax metric by definition. For after-tax numbers, take the calculator's output to your tax advisor along with your depreciation schedule.

Is cash on cash return the same as ROI?

They overlap but are not identical. Cash on cash return counts only actual cash income in year one against cash invested — it ignores appreciation, principal paydown, and tax benefits. Full ROI over a holding period includes all of those, which is why a property with a modest 5% cash on cash return can post a double-digit annualized ROI over ten years once appreciation and loan amortization are counted. Use cash on cash to judge the income stream, and a full ROI or IRR model for the hold-period decision.