See the real return on the cash you put in.
Cash-on-cash return shows how hard your actual out-of-pocket money works each year. Enter the price, the loan and the rent, and watch the yearly cash flow, the total cash invested and your cash-on-cash return update as you type.
The deal
Is this a strong return?
Where the rent goes each month
Monthly rent vs costs
Return as the down payment changes
Return scorecard
Cash-on-cash across down payments
Same price, rent and expenses, only the down payment changes. A larger down payment lowers the mortgage but ties up more cash, so the return can move either way.
| Down payment | Cash in | Mortgage /mo | Cash flow /mo | Cash flow /yr | Cash-on-cash |
|---|
Cash-on-cash return, explained
What cash-on-cash return actually measures
Cash-on-cash return answers one plain question: for every dollar of your own money that goes into a deal, how many cents of cash flow come back in a year? It is the annual pre-tax cash flow divided by the total cash you invested, shown as a percent. The cash you invested is your down payment plus the closing and rehab money you paid up front, not the full purchase price. Because it looks only at real money in and real money out, it is one of the fastest ways to compare a rental against a savings account, a bond or a different property.
The number ignores the part of the deal the bank paid for. That is the point. Two identical houses can post very different cash-on-cash returns simply because one is bought with more borrowed money and less of your own. Leverage lifts the return when the property earns more than the loan costs, and it drags the return down when it does not.
What counts as a strong cash-on-cash return
There is no single right target, but many rental investors look for cash-on-cash in the range of 8 to 12 percent, and some accept less in markets where they expect strong appreciation. A return under the yield on a safe bond is a warning sign, since you are taking on tenants, repairs and vacancy risk for little extra reward. A very high return can be real, or it can hide deferred maintenance and expenses that were left out of the math.
Treat cash-on-cash as the first screen, not the whole story. It does not include appreciation, loan paydown or tax benefits, and it uses today's numbers only. Pair it with cap rate, debt-service coverage and a year-by-year projection before you commit. Always confirm the rent, the taxes and the true repair budget with real quotes rather than round guesses.
Common questions
What is a good cash-on-cash return?
Many rental investors aim for roughly 8 to 12 percent, though the right target depends on your market, your risk and what safe alternatives pay. In areas with strong expected appreciation, some buyers accept a lower cash-on-cash return because they expect the value and rents to climb.
How is cash-on-cash different from cap rate?
Cap rate divides net operating income by the full property price and ignores the loan, so it measures the asset itself. Cash-on-cash divides the cash flow after the mortgage by only the cash you actually put in, so it measures the return on your money after financing. A leveraged deal can show a modest cap rate but a much higher cash-on-cash return.
Does cash-on-cash return include appreciation?
No. Cash-on-cash counts only the yearly cash flow you collect against the cash you invested. It leaves out appreciation, the equity you build as the loan is paid down and any tax benefits. Those can add a lot to total return, so treat cash-on-cash as one measure among several.
Should I use my down payment or the full price?
Use only the cash you personally invested, which is the down payment plus closing and rehab costs. The rest of the purchase price is the bank's money. Dividing cash flow by the full price would give you the cap rate, a different and lower number for a financed deal.
Why does a bigger down payment change the return?
A larger down payment shrinks the loan and the monthly mortgage, which raises monthly cash flow. But it also ties up more of your own cash, and the return divides cash flow by that larger amount. Depending on the loan rate, the return can rise or fall, which is why the table on this page shows several down-payment options side by side.
Does the calculator account for taxes on your income?
No. This shows a pre-tax cash-on-cash return, the standard way the figure is quoted. Your own income tax, depreciation and deductions depend on your situation, so ask a tax professional to see the after-tax picture for your holdings.
Estimates for planning only. Real returns depend on your financing terms, local market conditions, actual expenses, tenant quality and time in the market. Verify every figure before you buy.