Category
Real Estate
Cash-on-Cash Return Calculator
Estimate annual cash flow, debt service, and cash-on-cash return on invested capital
Estimated time
2 min
Cash-on-Cash Inputs
Estimate annual cash flow after debt service and calculate cash-on-cash return from your invested cash.
Acquisition price used to derive down payment and loan amount.
$
Percent of purchase price paid in cash at closing.
%
One-time acquisition costs paid at closing.
$
Upfront repair or renovation budget required before or just after leasing.
$
Annual loan interest rate used to estimate monthly payment and debt service.
%
Loan repayment length in years used for debt service calculations.
years
Scheduled annual rent before vacancy adjustments.
$
Percentage of annual rent expected to be lost due to vacancy or non-payment.
%
Recurring annual operating costs, excluding debt payments.
$
Formula Legend
Formula used
Cash Invested = Down Payment + Closing Costs + Rehab; Annual Cash Flow = NOI - Annual Debt Service; Cash-on-Cash = Annual Cash Flow / Cash Invested x 100
Cash Invested- total cash put into the deal at acquisition
NOI- effective annual rent minus operating expenses
Annual Debt Service- total yearly principal and interest payments
Annual Cash Flow- NOI remaining after debt service
Cash-on-Cash- annual cash flow as a percentage of cash invested
Financing assumptions are simplified and do not include lender fees or escrow.
How Cash-on-Cash Return Is Calculated
Cash-on-cash return measures annual pre-tax cash flow relative to your initial cash investment in the property.
- Cash invested includes down payment, closing costs, and initial rehab.
- Annual debt service is calculated from loan amount, interest rate, and loan term.
- NOI is effective rent minus operating expenses.
- Annual cash flow before taxes equals NOI minus annual debt service.
Examples
Conventional financing scenario
Inputs: $420,000 purchase, 25% down, 6.9% rate, 30-year term, $40,800 rent, 5% vacancy, $12,000 expenses
Result: Positive cash-on-cash return with moderate leverage
Leverage can raise returns, but debt service can quickly compress cash flow.
Higher repair budget
Inputs: $360,000 purchase, 20% down, $18,000 rehab, same rent profile
Result: Lower cash-on-cash due to larger initial cash invested
Heavy upfront rehab lowers first-year cash return even if NOI is unchanged.
Lower interest rate refinance view
Inputs: Same property cash flow but lower debt service from reduced rate
Result: Cash-on-cash return increases as annual debt service falls
Financing terms are one of the strongest drivers of leveraged cash returns.
FAQ
Is cash-on-cash the same as cap rate?
No. Cap rate ignores financing. Cash-on-cash includes financing and focuses on return on your actual cash invested.
Does this include taxes or depreciation benefits?
No. This version is pre-tax and does not include tax treatment, depreciation, or credits.
What if there is no loan?
Annual debt service becomes zero, and cash-on-cash is based only on property cash flow versus cash invested.
Should reserves be part of cash invested?
Many investors include initial reserves in cash invested for a more conservative return estimate.
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