Cash-on-Cash Return Calculator
What is the cash you actually put in earning? Annual cash flow ÷ cash invested — built from real expenses and your financing, with every step of the arithmetic shown.
Cash-on-cash return
How this number is built
Reading the result
Many buy-and-hold investors look for 8–12% in year one, though 4–6% is common and often accepted in expensive coastal markets where appreciation carries more of the total return. These are ranges investors screen with, not a promise of what any property will return.
Cash-on-cash counts only year-one cash. It excludes appreciation, loan paydown, and tax effects — so a property can look modest here and still perform well over a full hold.
The cash-on-cash return formula
Cash-on-cash = Annual pre-tax cash flow ÷ Total cash invested × 100Both halves trip people up. Cash flow is what's left after vacancy, operating expenses, and the mortgage — not rent minus mortgage, and not net operating income, which stops before debt service.
Cash invested is the money that actually left your account: down payment plus closing costs plus upfront repairs. Not the purchase price, and not the loan. Using the price by mistake is the single most common error, and it makes every deal look far worse than it is.
Worked through: a $60,000 total investment producing $4,800 of annual cash flow gives 4,800 ÷ 60,000 × 100 = 8%.
What is a good cash-on-cash return?
There isn't one national number, because the trade-off between cash flow and appreciation differs by market. These are the bands investors commonly screen with:
| Market type | Common range | Why |
|---|---|---|
| Expensive coastal metros | 4–6% | Appreciation carries more of the total return, so buyers accept thinner cash yields. |
| Balanced / mid-price markets | 6–9% | The band most buy-and-hold single-family deals land in once expenses are honest. |
| Midwest & Southeast cash-flow markets | 8–12% | Cash flow does most of the work, so investors screen for more of it. |
| All-cash purchase (no loan) | ~5–7% | Without leverage, cash-on-cash converges toward the cap rate. |
Ranges many investors look for — not a projection, and not a target this site recommends for your situation. A very high cash-on-cash return usually carries something with it: an older property, a weaker rental market, or optimistic assumptions worth testing before you rely on them.
What it leaves out
Cash-on-cash is a year-one, cash-only measure. It ignores appreciation, the equity your tenant builds by paying down the loan, and the eventual sale — the three things that usually dominate a rental's total return over a long hold. It also ignores your personal tax position.
So it's the right metric for "can I afford to hold this?" and the wrong one for "is this the best place for my money over ten years?" For that, the ROI calculator adds IRR and profit by source, and cap rate vs cash-on-cash explains when to reach for which.
Frequently asked questions
What is cash-on-cash return?
Cash-on-cash return is your first-year pre-tax cash flow divided by the total cash you put into the deal, expressed as a percent. If a property produces $4,800 of cash flow in year one and you invested $60,000 in down payment, closing costs, and repairs, your cash-on-cash return is 8%. It answers a narrower question than ROI: what is the money I actually handed over earning right now?
How do you calculate cash-on-cash return?
Annual pre-tax cash flow ÷ total cash invested × 100. Cash flow is rental income minus vacancy, minus operating expenses, minus debt service. Cash invested is the down payment plus closing costs plus any upfront repairs — not the purchase price, and not the loan amount. This calculator builds both halves from the price, rent, expenses, and financing you enter.
What is a good cash-on-cash return on a rental property?
Many buy-and-hold investors look for 8–12% in the first year, but the honest answer varies by market. In expensive coastal metros 4–6% is common and often accepted because appreciation carries more of the total return, while Midwest and Southeast cash-flow markets are usually screened at 8–12%. A return that looks unusually high deserves scrutiny — it often reflects higher risk or an expense line left out rather than a better deal.
What's the difference between cash-on-cash return and cap rate?
Cap rate ignores your loan entirely — it's net operating income divided by price, which makes it comparable between buyers financed differently. Cash-on-cash includes the mortgage and measures the return on your own cash specifically. The same property has one cap rate but a different cash-on-cash return for every buyer, depending on down payment and interest rate.
Does cash-on-cash return include appreciation?
No. It counts year-one cash only — no appreciation, no loan paydown, no tax effects, no eventual sale. That's why a property can show a modest cash-on-cash return and still deliver a strong total return over a full hold. For the complete picture, look at IRR and total ROI alongside it.
Is cash-on-cash return calculated before or after taxes?
Before income taxes, by convention — which is why it's often called pre-tax cash-on-cash. Property taxes are included as an operating expense, but your personal income tax situation, depreciation, and deductions are not. Those vary too much between investors to belong in a comparable metric.