Cash-on-Cash Return Calculator
The cash-on-cash return on a rental or other property: the yearly pre-tax cash flow as a share of the cash you actually put in.
Result…
How it's calculated
Cash invested = down payment + closing costs + repairs + other cash NOI = (rent × (1 − vacancy %) + other income) × 12 − operating costs Yearly cash flow = NOI − loan payments × 12 Cash-on-cash return = yearly pre-tax cash flow ÷ cash invested × 100%
Cash-on-cash return answers one question about a property bought partly with borrowed money: what does the cash you put in earn each year? Divide the yearly pre-tax cash flow (rent collected less running costs and loan payments) by the total cash invested: the down payment, closing costs, repairs and any other money put in up front. Work out the cash flow from the rent and costs, or type it in if you already know it. Unlike the cap rate, it reflects the loan, so the same building can give very different cash-on-cash returns with different deposits or rates. It ignores income tax, the loan paid down, changes in value and selling costs; for those, see the rental property and ROI calculators.
Your numbers, step by step
About the Cash-on-Cash Return calculator
This cash-on-cash return calculator shows what the money you actually put into a property earns in a year. Add up the cash invested, which is the down payment, closing costs, repairs and setup and any other money put in up front, then either type in the yearly pre-tax cash flow or let the calculator build it from the rent, other income, vacancy, operating costs and loan payments. It divides one by the other and also shows the monthly cash flow, the net operating income and how many years it would take to get your cash back at that rate. Every step uses your own numbers, so you can see exactly where the return comes from. It is the quick, focused check; for the full monthly picture of a rental, including the mortgage payment itself, use the rental property calculator.
How to use it
- Enter the “Down payment (deposit)”, “Closing (buying) costs”, “Repairs and setup” and any “Other cash invested”.
- Under “Cash flow”, choose “From rent and costs” to work it out, or “I know the yearly cash flow” to type it in.
- For the first option, enter the “Rent per month”, “Other income per month”, “Vacancy”, “Operating costs per year” and “Loan payments per month”.
- Read the cash-on-cash return, then try a different deposit or rent to see how much it moves.
Worked example
A buyer puts in a 50,000 down payment, 6,000 of closing costs and 4,000 of repairs: 60,000 of cash. Rent is 1,800 a month with 5% vacancy, so it collects 20,520 a year. Less 7,200 of operating costs, the net operating income is 13,320. Loan payments of 950 a month take 11,400, leaving a cash flow of 1,920 a year (160 a month). The cash-on-cash return is 1,920 ÷ 60,000 = 3.2%, and the cash would take about 31.3 years to come back at that rate.
Updated
Questions people ask
How do you calculate cash-on-cash return on a property?
Divide the yearly pre-tax cash flow by the total cash you invested, then multiply by 100. The cash flow is the rent collected less running costs and loan payments; the cash invested is the down payment plus closing costs, repairs and anything else paid up front.
What is the difference between cash-on-cash return and cap rate?
The cap rate divides the net operating income by the price, as if you paid cash, so it ignores the loan. Cash-on-cash takes off the loan payments and divides by your own cash, so it changes with the deposit and the interest rate. Compare both with the cap rate calculator.
What is a good cash-on-cash return?
There is no single figure. Investors compare it with what the same cash could earn elsewhere at a similar risk, and what they accept depends on the local market, interest rates and how much they expect the property to grow in value.
Should the loan principal count as a cost in cash flow?
Yes for cash-on-cash: the full loan payment leaves your pocket, so the cash flow takes it all off. The part that repays the loan builds equity, which is why ROI measures that include principal paydown come out higher.
What does cash-on-cash return leave out?
It is one year before income tax, so it ignores tax, rises or falls in value, the loan you pay down and the costs of selling. Use it as a first screen, and talk to an accountant or financial adviser before you buy, since tax and lending rules differ by country.