Cash-on-Cash Return Calculator
The leveraged investor's yardstick: annual pre-tax cash flow divided by the cash you actually put into the deal — down payment, closing costs, and initial repairs.
Cash-on-cash return
Example: $6,000 annual cash flow on $50,000 invested → 12%.
The return on your money, not the bank's
In the worked example, a property nets $6,000 of cash flow a year and took $50,000 of cash to acquire — a 12% cash-on-cash return, computed by the same tested engine as the calculator above. Notice what the purchase price never enters: with a loan covering the rest, the deal's return is measured against your $50,000, not the whole building. That is the entire logic of leveraged real estate — and also its risk, since the loan payment is owed whether or not the rent arrives.
Comparing against alternatives
Cash-on-cash makes real estate comparable with anything else your cash could do: a bond yield, an index fund's expected return, a high-yield savings rate. The fair comparison adds real estate's other return streams — principal paydown, possible appreciation, tax treatment — but starts from the honest cash number. If a deal only beats the alternatives after generous appreciation assumptions, it's an appreciation bet, not a cash-flow investment. To compute the cash-flow inputs from a full deal, use the Rental Property Calculator.
Frequently asked questions
What counts as "cash invested"?
Every dollar that left your pocket to acquire and ready the property: the down payment, closing costs, initial repairs and make-ready expenses, and any lender fees paid upfront. It is not the purchase price — that is the point. Leverage means your return is measured against your cash, not the building’s cost.
What counts as annual cash flow?
Rent actually expected (after a vacancy allowance) minus all operating expenses AND the mortgage payment, over a year. Cash-on-cash is a levered metric — unlike cap rate, the loan is included, because the question is what your invested cash earns after the bank is paid.
Why can leverage raise the cash-on-cash return?
Borrowing shrinks the cash you invest faster than it shrinks the cash flow — up to a point. If a property yields more than the loan costs, financing amplifies the return on your cash; if rates rise above the property’s yield, the same leverage cuts against you and can push cash flow negative. Leverage magnifies both directions.
Is negative cash-on-cash always a bad deal?
It means the property costs you money each month, which some investors accept when betting on strong appreciation or future rent growth. That is a speculative posture: the deal depends on the market moving, not on the property paying. This calculator accepts negative cash flow so you can see that number honestly.
Not financial advice: a general educational estimate that excludes taxes, appreciation, and loan paydown. Verify any deal with your own due diligence and qualified professionals. Values are processed locally in your browser and never transmitted. See the methodology page.