Cash-on-Cash Return Calculator
How it works
Cash-on-Cash Return = Annual Pre-Tax Cash Flow / Total Cash Invested. Cash flow is gross rental income minus operating expenses minus annual debt service. Cash invested is the down payment plus rehab, closing, and reserves.
Unlike cap rate, cash-on-cash incorporates leverage — making it the direct measure of return on actual dollars at risk. It is the standard yardstick for leveraged residential rental investors. For the long-form definition see /learn/cash-on-cash.
Frequently asked questions
What is a good cash-on-cash return?
For leveraged residential real estate, 8–12% is solid and 12%+ is strong. Anything under 6% in 2026 rate environment is thin once vacancy and unexpected repairs hit. Compare against alternative investments: if a savings account yields 4%, your real estate return should justify the additional risk and effort.
What is the difference between cash-on-cash return and cap rate?
Cap rate is unlevered (ignores financing); cash-on-cash incorporates the impact of leverage. A 6% cap rate property with 75% LTV financing can produce 10%+ cash-on-cash. They answer different questions: cap rate compares assets; cash-on-cash measures your actual return on dollars committed.
Should I include appreciation in cash-on-cash?
No. Cash-on-cash measures only current cash flow. Appreciation, principal paydown, and tax benefits are additional components of total return — incorporated into IRR rather than cash-on-cash. Cash-on-cash is the cleanest measure of in-pocket monthly cash from the deal.
Does cash-on-cash include principal paydown?
No. Cash-on-cash measures only what hits your bank account. Principal paydown builds equity but does not produce current cash. It is reflected in total return (IRR) and equity multiple, not cash-on-cash.