Cash on Cash Return Calculator
What your invested dollars actually earn each year once the mortgage is paid — counting the down payment, closing costs and the repairs you fund on day one.
−$112 ÷ $77,800 = −0.14%. Your mortgage rate is above the cap rate, so every borrowed dollar costs more than it earns.
Leverage: when borrowing helps and when it hurts
Set the property’s cap rate and your mortgage rate, then read the bars: each is the cash-on-cash return at a different down payment on the same building (3% closing costs included). When the cap rate beats the loan rate the short bars are on the right; flip the rates and the pattern reverses.
How to calculate cash-on-cash return
Cash-on-cash return = annual pre-tax cash flow ÷ total cash invested.
Annual pre-tax cash flow is twelve months of rent, minus vacancy, minus every operating expense, minus twelve mortgage payments. Total cash invested is everything that left your account to acquire the property: down payment, lender and title fees, inspections, and repairs made before the first tenant moves in.
Worked example: a $260,000 house with 25% down ($65,000), $7,800 closing costs and $5,000 of repairs means $77,800 invested. If it nets $330 a month after the mortgage, that’s $3,960 a year, or a 5.1% cash-on-cash return.
Cash-on-cash vs cap rate vs ROI
Cap rate ignores the loan and measures the property. Cash-on-cash includes the loan and measures your year-one cash yield. Total ROI (and IRR) add loan paydown, appreciation and tax effects over the hold. Use the cap rate calculator to compare buildings and the rental property calculator for the full-hold picture.
Questions investors ask
What is cash-on-cash return?
Cash-on-cash return is the pre-tax cash flow a property produces in a year divided by the total cash you put in to buy it — down payment, closing costs and upfront repairs. It answers: for every dollar I invested, how many cents come back each year?
How do you calculate cash-on-cash return?
Cash-on-cash = annual pre-tax cash flow ÷ total cash invested × 100. If a rental nets $4,800 a year after the mortgage and all expenses, and you put in $80,000 including closing costs and repairs, your cash-on-cash return is 6%.
What is a good cash-on-cash return?
Many rental investors target 8–12%. Below the yield on a risk-free Treasury bill you are relying on appreciation and loan paydown to justify the risk and work of being a landlord.
Is cash-on-cash return the same as ROI?
No. ROI usually includes all gains — loan paydown, appreciation and tax benefits — while cash-on-cash counts only the cash that lands in your bank account in a year. The full rental property calculator shows total return and IRR.
Why does my cash-on-cash go down when I put more money down?
When the cap rate is higher than your mortgage rate, borrowed money earns more than it costs, so less leverage lowers cash-on-cash. When the cap rate is lower than the mortgage rate, the opposite is true and a bigger down payment raises it.