Cash-on-Cash Return Calculator
The return on the money you actually put in.
Cash-on-Cash Return Calculator
Cash-on-cash = (NOI - debt service) / (down payment + closing costs).
Calculated instantly
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What This Calculator Does
The Cash-on-Cash Return Calculator measures the annual pre-tax cash flow of a rental property against the cash actually invested to buy it. It is the levered counterpart to cap rate and the number that tells you whether the deal pays you while you hold it.
How It Works
Cash invested is the down payment plus closing costs. Annual cash flow is net operating income minus annual debt service. Dividing cash flow by cash invested gives the cash-on-cash return. The calculator also reports the loan amount and the cash flow that would hit your target return, so you can see the gap before you make an offer.
Example
A $400,000 property with an $80,000 down payment and $8,000 closing costs uses $88,000 of cash. NOI of $32,000 minus $24,000 of debt service leaves $8,000 of cash flow. Cash-on-cash return is $8,000 / $88,000 = 9.09 percent. A 10 percent target would need $8,800 of cash flow.
Formula
down payment + closing costsNOI - annual debt servicecash flow / cash investedcash invested x target returnReading the Results
Annual pre-tax cash flow
NOI minus debt service, before income tax. It is the cash the property produces while you hold it, assuming the NOI and mortgage figures are accurate.
Cash-on-cash return
The current cash yield on the equity you invested. It rises with leverage when the cap rate exceeds the mortgage constant, and falls when it does not.
Cash flow needed for target
The annual cash flow that would deliver your target return. Compare it with the realistic cash flow after a vacancy and repair allowance.
Sources and References
CCIM Institute - Commercial Real Estate Financial Analysis
Cash-on-cash and levered return measures
Industry reference for the relationship between NOI, debt service, and equity cash flow.
IRS Publication 527 - Residential Rental Property
Rental income, expenses, and depreciation
Explains which costs are deductible and why taxable income differs from cash flow.
References identify the method or data behind this calculator. Where a standard or tariff changes, the current edition applies, and the assumptions stated above take precedence over a remembered figure.
Frequently Asked Questions
What is the difference between cash-on-cash and cap rate?
Cap rate divides NOI by the property price and ignores financing. Cash-on-cash divides cash flow after debt service by the cash invested. A property can have a 6 percent cap rate and a 12 percent cash-on-cash return with heavy leverage, but the leverage also increases risk.
Should closing costs be included in cash invested?
Yes. They are cash out of pocket that the investment must earn back. Include lender fees, title, appraisal, recording, and any immediate repairs. Exclude costs paid by the seller or financed into the loan.
Does cash-on-cash include principal paydown?
No. Debt service includes principal and interest, so principal paydown is already reducing cash flow. The wealth built through principal is a separate return component, captured by total return or IRR, not by cash-on-cash.
What is a good cash-on-cash return?
It depends on the market, property type, and risk. Many investors target 8-12 percent in stable markets, but a high return can signal a risky or management-intensive property. Compare it with the cap rate, the mortgage terms, and the reserves you will need.
How do reserves affect the calculation?
A reserve for repairs, turnover, and capital replacements is an operating expense in a conservative NOI. If you leave it out, cash-on-cash looks better than the cash you can actually spend. Include a realistic reserve before judging the return.