Real Estate
Cash-on-Cash Return Calculator
See the annual pre-tax cash flow a leveraged property generates relative to the actual cash you put in — down payment, closing costs, and renovations.
Cash-on-cash return
0.58%
Monthly cash flow
$48.26
Annual cash flow
$579.16
Total cash invested
$99,500
Loan amount
$262,500
Mortgage payment
$1,703
per month, principal & interest
Net operating income
$21,010
With a 25% down payment, you invest $99,500 to receive $579.16 per year in cash flow — a 0.58% cash-on-cash return.
A larger down payment increases the cash you invest but lowers the mortgage payment (and a smaller down payment does the reverse) — the comparison below shows that mechanical trade-off on this same deal, not which is preferable.
Loan balance over time
Your numbers
Tax, insurance, management, maintenance — exclude the mortgage.
See how the down payment changes the result
Same purchase price, financing terms, and rent — three different down payments, showing the mechanical trade-off between cash invested and cash-on-cash return.
20% down
-0.95%
$82,000 invested
30% down
1.66%
$117,000 invested
40% down
3.07%
$152,000 invested
The formula
Cash-on-Cash Return = (Annual Pre-Tax Cash Flow ÷ Total Cash Invested) × 100
Annual cash flow is Net Operating Income minus the annual mortgage payment (principal and interest). Total cash invested is the down payment plus closing costs and any upfront renovation spend — not the full purchase price.
How to read it
Cash-on-cash return is the metric leveraged real estate investors watch most closely, because it measures the thing that actually matters day to day: how hard is my own money working, given the loan I used to buy this property?
It differs from cap rate in one crucial way — it accounts for debt. Two nearly identical properties can have the same cap rate but wildly different cash-on-cash returns depending on the interest rate, loan term, and down payment each buyer negotiates. That’s the power, and the risk, of leverage: it can amplify returns when financing is cheap relative to the property’s yield, or crush them when it isn’t.
Because this metric only looks at cash flow, it deliberately ignores two other real sources of return — principal paydown (your tenants slowly buying the property for you) and appreciation. For the fuller picture across all of these, use the property investment calculator.
Frequently asked
What is a good cash-on-cash return?+
Many real estate investors target 8–12% as a solid cash-on-cash return, with anything above that considered strong. Numbers vary a lot by market and strategy — value-add or higher-leverage deals often target higher cash-on-cash to compensate for added risk or work.
Why is cash-on-cash return different from cap rate?+
Cap rate assumes an all-cash purchase and ignores financing. Cash-on-cash return uses your actual leveraged cash flow (after mortgage payments) divided by the cash you actually invested — so it reflects the effect of your specific loan terms, and can be higher or lower than the property’s cap rate depending on whether the leverage is working for or against you.
Does a bigger down payment increase or decrease cash-on-cash return?+
It depends on the deal. A bigger down payment reduces the mortgage payment (raising cash flow) but increases the cash invested (the denominator). If the property’s return exceeds the mortgage interest rate, more leverage (a smaller down payment) usually increases cash-on-cash return — and vice versa.
Is cash-on-cash return the same as total return?+
No. Cash-on-cash return only measures annual cash flow. It excludes principal paydown (which builds equity), property appreciation, and tax benefits — all of which contribute to total return but don’t show up as cash in your pocket each year.
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Educational tool, not advice. This calculator illustrates a standard formula using the numbers you enter. It does not account for your full financial picture, taxes, or local market conditions, and it is not a recommendation to buy, sell, or hold any asset. Speak with a licensed professional before making investment decisions.