Cash-on-Cash Return Calculator

Calculate cash-on-cash return: annual pre-tax cash flow as a percentage of total cash invested. Useful for leveraged rental properties. Links: ROI calculator, Real Estate ROI, Rental Property ROI, Marketing ROI, cap rate, net profit, What Is ROI?.

Cash-on-Cash Formula

Cash-on-Cash Return = (Annual Cash Flow / Total Cash Invested) × 100

Annual cash flow is the net income from the property after rent, expenses, and debt service. Total cash invested includes down payment, closing costs, and any rehab or improvement costs you paid out of pocket. CoC measures yield only on the money you put in, not the full property value. See ROI formula for the broader definition.

Difference from ROI

ROI (return on investment) measures total gain over the life of an investment—including appreciation, principal paydown, and sale proceeds—as a percentage of initial cost. Cash-on-cash return measures only the annual income yield on the cash you invested. ROI is better for total return over a holding period; CoC is better for ongoing income comparison. A property can have a modest CoC (e.g., 6%) but a strong total ROI if appreciation is significant. See Rental Property ROI for the full return picture including appreciation.

Why Leveraged Investors Use Cash-on-Cash

When you use debt, your cash investment is smaller than the property value. A $250,000 property with $62,500 down has a 25% cash position. Rent minus expenses and debt service might produce $4,000 in annual cash flow. CoC = 4,000 / 62,500 = 6.4%. The same property bought all-cash would show a lower percentage yield (4,000 / 250,000 = 1.6%) before appreciation. Leverage amplifies the cash yield on your out-of-pocket investment. Investors use CoC to compare deals on equal footing: how much income do I earn per dollar I actually put in? It does not capture equity build-up or appreciation, which annualized return and total ROI include.

Example Calculation

You buy a rental for $200,000 with $50,000 down and $3,000 in closing costs. Total cash invested = $53,000. Annual rent is $24,000; property tax, insurance, maintenance, vacancy, and management total $8,000; debt service is $12,000. Annual cash flow = 24,000 − 8,000 − 12,000 = $4,000. Cash-on-cash return = (4,000 / 53,000) × 100 = 7.55%. This tells you that for every dollar you put in, you earn about 7.55 cents per year in pre-tax cash flow. Compare that to the cap rate on the same property (typically based on NOI and full value) to see how leverage affects your yield.

Limitations

Cash-on-cash ignores appreciation, principal paydown, and eventual sale proceeds. It is a snapshot of income yield, not total return. Negative cash flow produces a negative CoC, which may be acceptable if appreciation or tax benefits offset it—but that is a speculative bet. CoC also does not account for the time value of money or the risk of the investment. Use it alongside total ROI and IRR for a complete picture.

Benchmark Ranges

Typical cash-on-cash targets for leveraged rentals range from 6% to 12% or higher, depending on market, risk, and investor goals. All-cash cap rates in many markets run 4–8%; leverage can push CoC above cap rate because you are measuring yield on a smaller denominator. Compare to your cost of capital and alternative investments. See the main ROI calculator for multi-year total return modeling.