Cash-on-Cash Return Calculator
Measure the annual cash income earned on the actual cash you invested in a rental property. Investors use this metric to compare rental properties and evaluate whether a deal generates adequate returns relative to invested capital.
About this calculator
Cash-on-cash return (CoC) is a real estate metric that measures the annual pre-tax cash flow relative to the total cash you invested, expressed as a percentage. The formula is: CoC Return (%) = (Annual Cash Flow / Total Cash Invested) × 100. Annual cash flow is the rental income remaining after paying all operating expenses and debt service (mortgage payments). Total cash invested includes your down payment, closing costs, and any upfront renovation expenses — essentially everything you paid out of pocket. Unlike ROI, CoC return ignores appreciation and only measures actual cash received versus cash spent, making it a reliable measure of short-term income performance. A CoC return of 8–12% is generally considered strong, though acceptable thresholds vary by market and investor goals.
How to use
Suppose you purchased a rental property with a $50,000 down payment, $3,000 in closing costs, and $7,000 in initial repairs — a total cash investment of $60,000. The property generates $18,000 per year in rent, and after mortgage payments and operating expenses, your annual cash flow is $6,000. Enter Annual Cash Flow = $6,000 and Total Cash Invested = $60,000. The calculator computes: ($6,000 / $60,000) × 100 = 10% cash-on-cash return. This means you earn 10 cents in cash for every dollar you invested, annually.
Frequently asked questions
What is a good cash-on-cash return for a rental property investment?
Most real estate investors target a cash-on-cash return of 8–12% as a benchmark for a solid performing rental property. However, what is considered 'good' varies significantly by market — properties in expensive coastal cities may yield 3–5% CoC while those in Midwest markets might offer 10–15%. Your personal threshold should also reflect your investment goals, risk tolerance, and the cost of your capital. A lower CoC return may still be acceptable if the property is in a high-appreciation market where long-term equity gains compensate for lower cash income.
How is cash-on-cash return different from cap rate in real estate?
Cap rate (capitalization rate) measures a property's income potential independent of financing, calculated as Net Operating Income (NOI) divided by the property's value. Cash-on-cash return, by contrast, accounts for your specific financing structure — it only measures the cash you personally invested and the cash flow you actually receive after debt service. Two investors buying the same property can have very different CoC returns depending on how much they financed and at what interest rate. Cap rate is better for comparing properties across markets, while CoC return reflects your personal investment performance.
What expenses should be subtracted when calculating annual cash flow for cash-on-cash return?
Annual cash flow is calculated by taking gross rental income and subtracting all cash outflows. These include mortgage principal and interest payments, property taxes, insurance, property management fees (typically 8–12% of rent), maintenance and repairs, vacancy allowances (commonly 5–10% of rent), and any HOA fees. It is important to include realistic vacancy and maintenance reserves rather than assuming 100% occupancy and zero repairs — those assumptions lead to overstated returns. The more accurate and conservative your expense estimates, the more reliable your cash-on-cash return calculation will be.