Cash-on-Cash Return Calculator
The yield on the cash you put into a rental
Free to check. Based on the rent, not your tax returns.
Estimates, not a loan offer. DSCR lenders set their own minimums, rates and fees. We may earn a commission if you get a loan through this link. How we calculate · How we make money
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Numbers work? See what a lender would offer.The rate above is an example. A DSCR lender quote shows your real payment, which changes the cash flow and DSCR.
Free to check. Based on the rent, not your tax returns.
Check what a DSCR lender would offer
DSCR loans qualify the property on its rent, not your personal income. Lenders usually want a DSCR of 1.0 to 1.25, 20–25% down and a credit score around 660 or higher. Terms vary by lender, so compare a real quote with the numbers above.
Free to check. Based on the rent, not your tax returns.
We may earn a commission when you click. RealEstateCalculator.org is not a lender.
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The same formulas in Excel or Google Sheets, plus a 10-year projection with equity, total profit and IRR. No email needed.
What is cash-on-cash return?
Cash-on-cash return is the yearly cash a rental pays you as a percentage of the cash you put in. It's the simplest way to compare a rental with other places your money could go.
How to calculate cash-on-cash return
Cash-on-cash return compares the cash a rental puts in your pocket each year with the cash you put into it:cash-on-cash = annual cash flow ÷ cash invested. Annual cash flow is rent after vacancy, operating expenses and mortgage payments. Cash invested is your down payment plus closing costs plus any repairs you pay for at purchase.
With the example numbers above, the property produces about $1,099 of cash flow a year. The cash invested is a $75,000 down payment plus $9,000 of closing costs, or $84,000. That's a cash-on-cash return of about 1.3%.
Cash-on-cash vs. cap rate
Cap rate ignores financing. It tells you how the property performs as if you paid cash. Cash-on-cash includes your loan, so it shows what your actual cash earns. When the mortgage rate is lower than the cap rate, borrowing raises cash-on-cash. When it's higher, borrowing lowers it. Change the down payment in the calculator to see which way your deal goes.
What cash-on-cash leaves out
Cash-on-cash only counts cash flow in the current year. It doesn't include the loan balance you pay down each month, any rise or fall in the property's value, or tax effects such as depreciation. A deal with low cash-on-cash can still build wealth through those, and a deal with high cash-on-cash can still lose money if the expenses are understated. Treat it as one measure of a deal, alongside cash flow, cap rate and DSCR.
Ways to improve it
- Negotiate the price or seller-paid closing costs to reduce the cash you need.
- Support a higher rent with comparable rentals.
- Check that the rate and loan terms fit the deal. Compare a real quote with the example rate above.
- Review expenses line by line, but don't cut reserves just to make the number look better.
Frequently asked questions
What is cash-on-cash return?
Annual pre-tax cash flow divided by the total cash you invested, including down payment, closing costs and up-front repairs. It measures the yield on your own money in a rental.
What is a good cash-on-cash return?
Targets vary with the market, risk and interest rates. Many investors look for something in the high single digits or low double digits, and accept less where they expect strong appreciation. Compare it with what your cash could earn elsewhere.
Is cash-on-cash return the same as ROI?
No. Cash-on-cash counts only this year's cash flow. A full ROI also includes principal paid down, appreciation and tax effects, so a low cash-on-cash deal can still have a solid total return.
Can cash-on-cash return be negative?
Yes. If the mortgage and expenses exceed income, cash flow is negative and so is cash-on-cash. The calculator flags it in red.
Does a bigger down payment raise cash-on-cash?
Not always. A bigger down payment lowers the mortgage and raises cash flow, but it also raises the cash invested. Borrowing helps cash-on-cash when the cap rate is above your mortgage rate and hurts when it's below. Change the down payment above to see which way your deal goes.