Measure your actual cash return on the cash you invested — the true investor's metric after financing costs.
All upfront cash beyond down payment
Taxes, insurance, management, maintenance, vacancy
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Calculate Cash on Cash
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Common questions about this calculator and how to use it effectively.
Cash on cash return = Annual Pre-Tax Cash Flow ÷ Total Cash Invested. It measures the actual cash yield on capital deployed: down payment + closing costs + rehab. Unlike cap rate, it reflects financing — making it the most relevant metric for leveraged real estate investors comparing multiple deals. Compare deals using our Cap Rate Calculator for a financing-independent view.
Most investors target 8–12%+. Under 4% is generally low but may be acceptable in high-appreciation markets. 4–7% is moderate and common in competitive markets. 7–10% is good. 10%+ is excellent. Remember: CoC is pre-tax — after-tax returns may differ based on depreciation benefits.
Higher mortgage rates increase monthly payments and directly reduce cash flow. At a 5% cap rate: 4% financing creates positive leverage (CoC > cap rate); 7% financing creates negative leverage (CoC < cap rate). The spread between cap rate and financing cost is critical to deal viability. Compare deals using our Cap Rate Calculator for a financing-independent view.
Positive leverage: financing rate < cap rate = borrowing amplifies returns. Negative leverage: financing rate > cap rate = borrowing hurts returns. In 2025's high-rate environment, many deals face negative leverage — which is why cash on cash scrutiny is more important than ever. Compare deals using our Cap Rate Calculator for a financing-independent view.
Total cash invested = Down payment + Closing costs + Upfront rehab/repairs. This is the denominator in your CoC calculation. Missing closing costs or deferred maintenance in this figure inflates your apparent CoC return — always use a fully loaded cost basis.
CoC measures annual cash yield in year one. Total ROI includes cash flow, principal paydown, appreciation, and sale proceeds over the full hold period. CoC is for immediate deal screening; total ROI is for long-term investment comparison. Use our Rental ROI calculator for the full picture.
No — cash on cash only measures cash flow (income minus all cash expenses including mortgage payment). Principal paydown is a form of return (it builds equity) but it's not cash in your pocket today. Total return including principal paydown is better captured by total ROI over a holding period. For full hold-period analysis including appreciation and sale proceeds, use our Rental ROI Calculator. For long-term hold analysis, see our Rental ROI Calculator — and compare against dividend investing returns with our DRIP Calculator.
Vacancy is one of the biggest cash flow killers. Even 5% vacancy on $24,000 annual rent = $1,200/year less income. At 10% vacancy (one month/year), cash flow drops significantly. Always model vacancy as an expense — not doing so leads to unrealistic cash flow projections and disappointing actual returns. To plan how rental income fits your retirement goals, use our Retirement Calculator.
Most experienced investors target 8–12% cash on cash return as a baseline for leveraged rental properties, though this varies significantly by market and strategy. In high-appreciation coastal markets, 4–6% CoC is commonly accepted because investors are banking on equity growth. In cash-flow-focused Midwest or Southeast markets, 10–15%+ CoC is achievable. Below 6% CoC on a leveraged deal generally signals thin margins that leave little room for vacancy, repairs, or rate increases. Use this calculator to stress-test your assumptions — model a 10% vacancy rate and a 1% annual maintenance reserve to see your downside CoC before committing.