How it works
Monthly rental income is annualized and reduced by vacancy loss and operating expenses to find NOI. Annual debt service is subtracted from NOI to find annual pre-tax cash flow, which is then divided by total cash invested.
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Cash-on-Cash Return Calculator
This free cash-on-cash return calculator estimates annual cash flow and return on a rental property, factoring in financing — unlike cap rate. Enter rental income, vacancy, operating expenses, debt service, and total cash invested to see the return on the cash you actually put in, no account needed.
Calculator inputs
Cash-on-cash return measures annual cash flow against the cash you actually put in, after financing. Cap rate measures NOI against property value, before financing.
Estimates for planning only, based on the numbers you enter. Not financial, tax, or legal advice.
Formula
Cash-on-cash return = annual pre-tax cash flow ÷ total cash invested × 100. Annual pre-tax cash flow = NOI − annual debt service. Total cash invested = down payment + closing costs + renovation costs + other initial cash costs.
Example
A property with $6,000 in annual pre-tax cash flow and $120,000 total cash invested has a 5% cash-on-cash return.
Important assumptions
This is a calculation tool only — it does not provide investment recommendations or judge whether a return is good or bad. Cash-on-cash return is not cap rate or total ROI, and mortgage principal is not an NOI operating expense.
How to Calculate Cash-on-Cash Return
Cash-on-cash return measures annual pre-tax cash flow against the actual cash invested — down payment, closing costs, and any initial renovation costs, not the full purchase price. Start from NOI (income after vacancy loss and operating expenses), subtract annual debt service (mortgage principal and interest), and divide the result by total cash invested.
Worked example: a duplex has a $28,000 NOI and $19,000 in annual debt service, leaving $9,000 in annual pre-tax cash flow. The buyer put down $140,000 between the down payment and closing costs. Cash-on-cash return = $9,000 ÷ $140,000 × 100 = 6.4%.
What to Include When Calculating Cash-on-Cash Return
- NOI — rental income after vacancy loss and operating expenses, before financing
- Annual debt service: mortgage principal and interest for the year
- Total cash invested: down payment, closing costs, and initial repair or renovation costs
- Any other upfront cash costs needed to get the property rent-ready
Common Mistakes When Calculating Cash-on-Cash Return
- Using the full purchase price as “cash invested” instead of just the cash actually put in
- Leaving debt service out, which turns the number into something closer to cap rate
- Forgetting closing costs and initial repairs when totaling cash invested
- Comparing cash-on-cash return across deals with very different financing terms as if they were equivalent
Compare against the unleveraged return with the Cap Rate Calculator, or factor in a vacancy stretch with the Vacancy Loss Calculator.
Frequently asked questions
Divide annual pre-tax cash flow by total cash invested, then multiply by 100. A duplex with $9,000 in annual cash flow (NOI minus debt service) against $140,000 in down payment and closing costs works out to a 6.4% cash-on-cash return.
Use cash-on-cash return whenever financing is actually part of the picture — it accounts for your mortgage payments, while cap rate deliberately leaves them out. Comparing a financed deal's cap rate to an all-cash deal's cash-on-cash return isn't a fair apples-to-apples comparison.
Down payment, closing costs, initial renovation or repair costs, and any other upfront cash costs needed to get the property rent-ready — not the full purchase price, since most of that amount is typically financed rather than paid outright in cash.
Yes, it certainly can. If debt service and operating expenses exceed income, annual pre-tax cash flow — and the return along with it — comes out negative. That's a perfectly valid result reflecting the numbers you entered, not an error in the calculation.
This calculator doesn't evaluate any result as good or bad on its own — that depends entirely on your market, financing terms, risk tolerance, and personal goals. Use it to compare specific deals against each other rather than against a single fixed benchmark number.
Yes, as annual debt service when finding cash flow — this is exactly what distinguishes cash-on-cash return from cap rate in the first place. It's not treated as an NOI operating expense, but it is subtracted afterward to find the actual cash flow figure.
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