Finance
Cash on Cash Return Calculator
Calculate cash-on-cash return on a rental property from down payment, closing costs, repairs, rent, expenses, and mortgage payments.
Cash-on-cash return inputs
Typical: 20% to 25% for investment properties.
Percent of purchase price. Default 3%.
Typical assumption: 5% to 10%.
Property tax, insurance, maintenance, and management. Exclude mortgage payments and capital expenditures.
Principal plus interest only. Set to 0 for an all-cash deal.
Cash-on-cash return
5.06%
Return band: average
- Total cash invested
- $89,000.00
- Annual pre-tax cash flow
- $4,500.00
- Monthly pre-tax cash flow
- $375.00
- Effective gross income
- $28,500.00
- Net operating income
- $18,500.00
- Annual debt service
- $14,000.00
- Break-even vacancy
- 20.00%
Frequently Asked Questions about the Cash on Cash Return Calculator
How do you calculate cash-on-cash return?
Divide annual pre-tax cash flow by total cash invested, then multiply by 100. Cash flow is NOI minus annual mortgage payments. Cash invested is down payment plus closing costs plus initial repairs. A $4,500 cash flow on $89,000 invested gives a 5.06% return.
What counts as a good cash-on-cash return?
Under 5% is poor for a leveraged rental and often trails passive index returns. 5% to 8% is average. 8% to 12% is good and the band most buy-and-hold investors target. Above 12% is excellent but usually requires below-market entry, value-add, or aggressive leverage.
How is cash-on-cash return different from cap rate and ROI?
Cap rate ignores financing and measures NOI against purchase price. Cash-on-cash includes the mortgage and measures cash flow against only the cash you put in. ROI captures total return including appreciation and principal paydown.
What is break-even vacancy and why does it matter?
Break-even vacancy is the rate at which annual cash flow hits zero. The wider the gap between your assumed vacancy and break-even, the more cushion you have. Below 10% of slack is tight; above 25% means the deal still works through a soft rental market.
Should I use the mortgage payment or the loan amount as my input?
Use whichever you have. If your lender quoted a monthly payment, multiply by 12 and enter annual P+I. If you only know loan amount, rate, and term, enter those and the calculator amortizes. Skip both for an all-cash deal.