Cash-on-cash return calculator

What is cash-on-cash return?

Cash-on-cash return measures the annual return on the actual cash you invested. The formula: CoC = Annual Pre-Tax Cash Flow ÷ Total Cash Invested × 100. Unlike cap rate (which ignores financing), CoC accounts for your mortgage and tells you what your out-of-pocket dollars actually earn.

What is a good cash-on-cash return?

Most investors target 8-12% or higher. Below 5% is generally weak for the effort of owning property. Above 15% usually involves higher risk or creative financing like the BRRRR method. For a complete property analysis including expenses, vacancy, and CapEx, use our rental property calculator.

Cash-on-cash vs. cap rate

Cap rate measures the property's return independent of financing. Cash-on-cash measures your return on the cash you actually put in. They answer different questions. Cap rate is useful for comparing properties. Cash-on-cash is useful for comparing how different financing structures affect your return on the same property.

For example, a property with a 6% cap rate might deliver a 10% cash-on-cash return with a 25% down payment, or a 14% cash-on-cash return with a 20% down payment, because more leverage means less cash invested for the same cash flow. Use our cap rate calculator to compare properties before factoring in financing.

How to improve your cash-on-cash return

There are only three levers: increase rent, decrease expenses, or reduce the cash you put in. Increasing rent comes from finding underpriced properties or making value-add improvements. Decreasing expenses means shopping insurance, managing efficiently, and minimizing vacancy. Reducing cash invested means using strategies like the BRRRR method to pull your cash back out through a refinance.