Cash invested = down payment + closing costs + initial repairs/improvements.
Calculation details
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Use this result
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What does this calculator estimate?
Cash-on-cash return is the annual pre-tax return on your cash investment in a rental property. Unlike cap rate (which ignores financing), it reflects your down payment, loan, and operating performance together. Enter annual pre-tax cash flow and total cash invested to get yours.
- Cash-on-cash = annual cash flow ÷ cash invested
- Financing-aware (unlike cap rate)
- Snapshot, not total return
What cash-on-cash return shows
Cash-on-cash measures the return on the money you actually put in — down payment, closing, and cash renovations — versus the cap rate's unleveraged view. It's the number that tells you how your cash is performing.
Limitations to watch for
The calculation needs total cash invested — including closing costs and fixes, not just the down payment. It ignores appreciation and tax benefits (see the ROI calculator). It's an annual snapshot; returns change as rents and expenses move.
How to use it in practice
Total every dollar of cash you put into the deal, then divide the annual flow. Compare to other uses of that cash (stocks, other properties). 8–12% is a common target for rental cash flow.
['Enter the annual cash flow.', 'Enter total cash invested (down, closing, fixes).', 'Read the cash-on-cash return.']
What cash-on-cash measures
Cash-on-cash return is annual pre-tax cash flow divided by cash invested: $3,600 cash flow on a $40,000 down payment is 9 percent. It measures the cash yield of the deal — the return on the money you actually put in.
Cash flow vs. total return
Cash-on-cash ignores appreciation, principal paydown, and tax benefits. A deal with 9 percent cash-on-cash plus 4 percent appreciation and principal paydown may have a 13+ percent total return. The calculator reports the cash yield; the total return needs the other components.
Why it uses cash invested, not price
The metric divides by your actual cash: down payment plus closing costs plus initial repairs. Two buyers of the same property can have different cash-on-cash returns depending on financing. The calculator's cash-invested input makes that personal.
A worked example
$50,000 down plus $8,000 closing and repairs = $58,000 invested. Annual cash flow $6,400: cash-on-cash = 11 percent. If the property needed $15,000 of initial repairs, the return drops to 8.8 percent. The calculator makes the upfront-cost sensitivity visible.
Comparing deals
Cash-on-cash is the standard first filter for comparing rental deals because it normalizes for financing. Screen with it, then verify with total return — the calculator gives the first number cleanly.
How this calculator works
Formula
Cash-on-cash return = annual cash flow ÷ total cash invested × 100. Total cash includes the down payment, closing costs, and renovations paid in cash.
Worked example
$3,600 annual cash flow on $40,000 invested: 9.0% cash-on-cash return.
Assumptions to verify
- All cash costs are included in the investment.
- Cash flow is annual and stable.
- Appreciation and tax effects are excluded.
Frequently asked questions
What is cash-on-cash return?
Annual cash flow divided by the cash you invested: $3,600 ÷ $40,000 = 9%.
How is it different from the cap rate?
The cap rate ignores financing; cash-on-cash includes your down payment and leverage.
What counts as cash invested?
Down payment, closing costs, and any cash renovations — every dollar you put in.
What is a good cash-on-cash return?
8–12% is a common target for rental cash flow; higher in riskier markets.
Does it include appreciation?
No — it's the cash yield only. The ROI calculator adds appreciation and paydown.
Why is my cash-on-cash lower than the cap rate?
Leverage cuts the other way when interest rates are high — financing costs reduce the cash yield.
How do I improve it?
Lower your all-in cash cost, raise rents, cut expenses, or refinance to reduce debt service.
How do I calculate it?
Annual pre-tax cash flow ÷ (down payment + closing costs + initial repairs).
What is a good cash-on-cash?
8–12% is a common target for rental deals, varying by market and risk.
Cite this tool
BoringToolsKit. “Cash-on-Cash Return Calculator.” boringtoolskit.com/cash-on-cash-return-calculator/ (reviewed 2026-08-25). Free to reference in articles, syllabi, and answer posts with a link.
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