Real estate investor tool

Cash on Cash Return
Calculator

Enter your annual pre-tax cash flow, down payment, closing costs, and rehab costs — see your cash-on-cash return %, total cash invested, and how long until you recoup your investment. Free. No signup.

Cash on Cash Return Calculator

Enter your investment details to calculate your annual cash-on-cash return.

Annual Pre-Tax Cash Flow ($)

Down Payment ($)

Closing Costs ($)

Rehab / Renovation Costs ($)

How to Calculate Cash on Cash Return

Enter Your Annual Pre-Tax Cash Flow

Annual pre-tax cash flow is your total rental income minus all operating expenses (mortgage payments, property taxes, insurance, maintenance, property management fees, and vacancy allowance) for the year — before income taxes. If you collect $2,000/month in rent and pay $1,000/month in all expenses, your annual pre-tax cash flow is ($2,000 − $1,000) × 12 = $12,000.

Enter Your Down Payment

The down payment is the cash you paid out of pocket at closing to purchase the property. Investment properties typically require 20–25% down. For a $200,000 property with 20% down, enter $40,000. This is the largest component of your total cash invested and has the biggest impact on your cash-on-cash return.

Enter Closing Costs

Closing costs include lender fees, title insurance, escrow fees, recording fees, and pre-paid items like property taxes and homeowners insurance. For investment properties, closing costs typically run 2–5% of the purchase price. On a $200,000 property, budget $4,000–$10,000 for closing costs.

Enter Rehab and Renovation Costs

If you purchased a distressed property or made improvements before renting, enter the total out-of-pocket cost of those renovations. For a turnkey rental with no work needed, enter $0. Rehab costs are included in total cash invested because they represent real cash you deployed to make the property rentable and profitable.

Read Your Results

The calculator divides your annual pre-tax cash flow by total cash invested to produce your cash-on-cash return percentage. A result above 8% is generally considered good for a rental property. The monthly cash flow equivalent shows your average monthly income, and years to recoup shows how long until cumulative cash flow equals your initial investment.

Cash on Cash Return FAQs

What is cash on cash return in real estate?

Cash on cash return (CoC) is a real estate metric that measures annual pre-tax cash flow as a percentage of the total cash invested to acquire and prepare the property. It tells you how efficiently your out-of-pocket capital is generating income. Unlike cap rate, cash on cash accounts for financing — properties with mortgage debt will have different cash-on-cash returns than all-cash purchases, even with the same cap rate.

What is the cash on cash return formula?

Cash on Cash Return = Annual Pre-Tax Cash Flow ÷ Total Cash Invested × 100. Total Cash Invested = Down Payment + Closing Costs + Rehab Costs. Annual Pre-Tax Cash Flow = Gross Rental Income − Operating Expenses − Mortgage Payments. For example: $12,000 annual cash flow ÷ $65,000 total cash invested = 18.5% cash on cash return.

What is a good cash on cash return?

Most real estate investors target a cash on cash return of 8–12% or higher, though acceptable thresholds vary by market and strategy. In expensive coastal markets, 4–6% may be reasonable given appreciation potential. In Midwest or Sun Belt markets, investors often demand 10–15%+. A cash on cash return below the risk-free rate (e.g., Treasury yields) suggests the investment does not adequately compensate for the risks of property ownership.

What is the difference between cash on cash return and cap rate?

Cap rate (capitalization rate) ignores financing — it divides net operating income by the total property purchase price. Cash on cash return accounts for your specific financing terms and measures actual cash in vs. cash out. Two investors buying the same property at the same cap rate will have different cash-on-cash returns if one puts 20% down and the other puts 30% down. Cash on cash is more useful for comparing leveraged investments; cap rate is better for comparing properties independently of financing.

Does cash on cash return include mortgage paydown?

No. Cash on cash return only measures cash flow — money actually received or paid out. Principal paydown (equity buildup from amortization) is a real component of total return but is not included in cash on cash return because it is not cash you receive. To measure total return including appreciation and amortization, use total return on investment or equity multiple metrics.

How do closing costs affect cash on cash return?

Closing costs increase your total cash invested, which reduces your cash on cash return. For example, if you have $12,000 in annual cash flow and your total cash invested is $60,000, your CoC is 20%. If closing costs add $5,000, bringing total cash invested to $65,000, your CoC drops to 18.5%. This is why investors negotiate seller-paid closing costs when possible — it reduces cash deployed and increases cash-on-cash return without changing the property's fundamentals.

Should rehab costs be included in cash on cash return?

Yes. Rehab costs should always be included in cash on cash return because they represent real cash you invested in the property. Excluding rehab costs overstates your return and gives you a false picture of investment performance. The only exception would be if you financed the renovation through a construction loan or HELOC — in that case, the financed portion is not out-of-pocket cash and should not be counted in total cash invested.

How does an LLC affect cash on cash return calculations?

Holding a rental property in an LLC does not change the mathematical calculation of cash on cash return — the formula is the same regardless of entity type. However, LLC operating costs (state fees, registered agent fees, accounting) are additional expenses that reduce your annual pre-tax cash flow. When calculating cash flow for LLC-held properties, include these entity costs as operating expenses to get an accurate CoC return figure.

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Disclaimer

This cash on cash return calculator is provided for educational and planning purposes only. It does not constitute financial, tax, or investment advice. Results are based solely on the inputs you provide and do not account for property appreciation, depreciation tax benefits, vacancy risk, capital expenditures, or changes in rental income and expenses over time. Actual investment performance will vary. Consult a licensed financial advisor, CPA, or real estate professional before making investment decisions.