Cash on Cash Return Calculator
Measure the annual return on the cash you actually invest in a rental property. Enter your numbers below to instantly see cash flow, cash-on-cash return, cap rate, and projected total return at sale.
How to Calculate Cash on Cash Return
This calculator uses standard real estate investment formulas to evaluate the cash-on-cash return of a rental property.
Cash on Cash Return Formula
Cash-on-cash return measures the annual pre-tax cash flow relative to the total cash actually invested. It answers the question: how much cash income am I getting back per dollar invested? Maintenance is charged on gross rent, while the property management fee is charged on the collected (occupied) rent.
Net Operating Income (NOI) and Cap Rate
Net Operating Income is the property's income after operating expenses but before financing. Cap rate measures the unleveraged return on the property value.
Cap Rate = NOI / Purchase Price × 100
Want to isolate that single metric — or back into the purchase price a target cap rate implies — without the financing details this page adds on top? The cap rate calculator is built for exactly that.
Total Cash Invested
Your total cash investment is the sum of the down payment, closing costs, and any renovation costs — everything you put in out of pocket before the property starts generating income.
Vacancy Rate and Annual Debt Service
The vacancy rate is the share of the year the unit sits empty. It is deducted from gross rent to give the collected rent and the effective gross income behind every figure above. Annual debt service is twelve months of mortgage payments (principal and interest) on the amount you finance after your down payment. It is subtracted on the way to annual cash flow but never enters NOI, which is exactly why cap rate and cash-on-cash return can point in different directions on the same deal.
Annual Debt Service = Monthly Mortgage Payment × 12
Not sure what that monthly mortgage payment should be for your loan? The mortgage amortization calculator breaks it into principal and interest over the full term, including the effect of any extra payments.
Total Return at Sale
Projects your total return over a 5-year hold, including equity gain (appreciation + principal paydown) and cumulative cash flow, relative to your initial cash investment. For the projection, rent and maintenance are assumed to grow at the same annual rate as the property's appreciation.
For the same deal viewed year by year — cash flow, cap rate, and break-even rent alongside this total return — the rental property ROI calculator lays out the full picture.
Cash-on-Cash Return vs. DSCR
Cash-on-cash return tells you how hard your own dollars are working; it says nothing about whether a lender will approve the loan in the first place. Lenders sizing a rental-property loan look instead at whether the property's own income covers its own debt payment, independent of your personal finances — a different ratio computed by the DSCR calculator. A deal can clear a healthy cash-on-cash return and still fail a lender's minimum DSCR, or vice versa, since the two metrics are built from different numerators.
Worked Example
Consider a $350,000 duplex bought with 25% down, plus $7,000 in closing costs and $15,000 in renovations before it's rented out. It collects $2,400 in monthly rent with a 5% vacancy allowance, $4,200/year in property tax, $1,500/year in insurance, no HOA, 10% of rent set aside for maintenance and 8% for property management, financed at 6.5% over 30 years, assuming 3%/year appreciation.
Inputs Used
- Purchase Price: $350,000
- Down Payment: 25%
- Closing Costs: $7,000
- Renovation Costs: $15,000
- Monthly Rent: $2,400
- Vacancy Rate: 5%
- Property Tax: $4,200/yr
- Insurance: $1,500/yr
- HOA: $0/mo
- Maintenance: 10% of rent
- Property Management: 8% of rent
- Loan Interest Rate: 6.5%
- Loan Term: 30 years
- Appreciation: 3%/yr
Computed Result
- Annual Cash Flow: $-3,319
- Cash Invested: $109,500
- Cash-on-Cash Return: -3.03%
- Cap Rate: 4.74%
- NOI: $16,591
- Annual Debt Service: $19,910
- Monthly Cash Flow: $-277
- Total Return at Sale (5yr): 38.02%
How to Read This Result
A cash-on-cash return of 8-12% is often cited as a common industry benchmark for a solid rental deal, though this varies by market and is never a guarantee. In this example the return comes out negative (-3.03%) because financing and operating costs outweigh the rent collected in year one. That doesn't automatically make the deal a bad one — the same numbers project a 38.02% total return after five years once appreciation and loan paydown are included, which is why investors weigh more than one metric before deciding. Change any input above to see how sensitive the return is to price, rent, or financing terms.
Cash on Cash Return Calculator FAQs
What is a good cash-on-cash return?
A cash-on-cash return of 8-12% is generally considered strong, though this varies significantly by market and property type. In high-appreciation markets, investors may accept lower cash returns. These are common industry benchmarks, not guarantees, and vary by market.
How is cash-on-cash different from cap rate?
Cap rate ignores financing and evaluates the property on its own merits. Cash-on-cash accounts for your specific mortgage and measures the return on your actual cash invested.
Should I include renovation costs?
Yes. Any cash you invest to get the property rent-ready should be included in your total cash investment. This gives you a true picture of your return.
Why does vacancy matter?
No rental property is occupied 100% of the time. A 5-8% vacancy rate is standard for most markets and ensures your cash flow analysis is realistic.