Free Tools Cash on Cash Return Calculator

Cash on Cash Return Calculator

Inch Calculator

A Cash-on-Cash Return Calculator is a real estate investment tool that measures how much cash income a property generates relative to the actual cash you’ve invested.

Unlike cap rate, which ignores financing, cash-on-cash return takes your mortgage and financing structure into account.

Formula

$$\text{Cash-on-Cash Return} = \frac{\text{Annual Pre-Tax Cash Flow}}{\text{Total Cash Invested}} \times 100\%$$Cash-on-Cash Return=Total Cash InvestedAnnual Pre-Tax Cash Flow​×100%

Where:

• Annual Pre-Tax Cash Flow = Rental income − Operating expenses − Debt payments (mortgage principal and interest)
• Total Cash Invested = Down payment + closing costs + renovation costs + other upfront cash expenses

Example

Suppose you buy a rental property for $300,000:

• Down payment: $60,000
• Closing costs: $5,000
• Renovations: $10,000

Total cash invested:$$60,000 + 5,000 + 10,000 = 75,000$$60,000+5,000+10,000=75,000

Annual figures:

• Rental income: $30,000
• Operating expenses: $10,000
• Mortgage payments: $8,000

Annual pre-tax cash flow:$$30,000 – 10,000 – 8,000 = 12,000$$30,000−10,000−8,000=12,000

Cash-on-cash return:$$\frac{12,000}{75,000} \times 100 = 16\%$$75,00012,000​×100=16%

So your cash-on-cash return is 16% per year.

Cap Rate vs. Cash-on-Cash Return

For example, two investors could buy the same property:

• Investor A pays all cash.
• Investor B puts 20% down and gets a mortgage.

Both would have the same cap rate, but their cash-on-cash returns could be very different.

When to Use It

Cash-on-cash return is useful when:

• Comparing leveraged real estate investments.
• Evaluating rental properties.
• Determining whether financing improves your returns.
• Comparing real estate investments with other investments such as stocks or bonds.