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Cash on Cash Return Calculator
Use this free cash on cash return calculator to see how hard your rental money is working. Enter the rent, expenses, and the cash you put in, and it shows your annual cash flow and your return as a percentage — with a live chart and gauge.
| Figure | Value |
|---|---|
| Annual rental income | $24,000.00 |
| Annual expenses | $12,000.00 |
| Annual pre-tax cash flow | $12,000.00 |
| Total cash invested | $100,000.00 |
| Monthly cash flow | $1,000.00 |
| Cash on cash return | 12.00% |
How it works
Cash on cash return is the simplest way to judge a rental property: it tells you what percentage of the cash you actually put in comes back to you each year as cash flow. Unlike return figures that include the mortgage loan or the property's rising value, cash on cash looks only at your own money in and the cash it produces. That makes it the first number most rental investors calculate, and the one they use to compare two properties that cost very different amounts.
The formula is short: cash on cash return = annual pre-tax cash flow ÷ total cash invested. Annual pre-tax cash flow is the rent and any other income the property earns in a year, minus everything it costs to run in that year — the mortgage payment, property tax, insurance, maintenance and repairs, property management, and an allowance for months when it sits empty. Total cash invested is everything you paid out of pocket to buy and prepare the property: the down payment, closing costs, and any rehab or furnishing costs before the first tenant moves in.
Notice what the formula leaves out. It does not count the part of the mortgage payment that pays down the loan balance, even though that builds your equity. It does not count the property going up in value, and it does not count tax — depreciation and deductions can change the after-tax picture a lot. That is a feature, not a flaw: cash on cash answers one narrow question, how hard is my cash working right now, and it answers it cleanly. Use it alongside other measures such as cap rate and total return when you want the full picture.
What counts as a good return depends on the market, but many investors look for 8% or more, and treat anything under about 5% as weak for a rental that also carries landlord work and risk. A property in a high-demand area may accept a lower cash on cash return because the rent is stable and the value is likely to rise; a property in a cheaper area usually needs a higher return to compensate for slower growth and higher vacancy. The gauge beside the calculator runs from 0% to 20% so you can see where your number sits at a glance.
The expenses field is where most estimates go wrong, so be honest with it. New investors often count only the mortgage and forget vacancy, repairs, and the months between tenants. A common rule of thumb is to allow 5% to 10% of rent for vacancy and 5% to 10% for maintenance, on top of tax, insurance, and management. If your cash flow only looks good because repairs are set to zero, it is not good — it is unfinished. Put realistic numbers in, including a vacancy allowance, and the return you see is one you can actually plan around.
Worked example
An investor buys a rental property with an $85,000 down payment, $5,000 of closing costs, and $10,000 of rehab work before renting it out. The property rents for $2,000 a month, and total monthly expenses — mortgage, tax, insurance, maintenance, and vacancy — come to $1,000 a month.
Step 1: Annual rental income is $2,000 × 12 = $24,000.
Step 2: Annual expenses are $1,000 × 12 = $12,000.
Step 3: Annual pre-tax cash flow is $24,000 − $12,000 = $12,000.
Step 4: Total cash invested is $85,000 + $5,000 + $10,000 = $100,000.
Step 5: Cash on cash return is $12,000 ÷ $100,000 = 0.12, or 12.00%.
The result: a 12.00% cash on cash return, or $1,000 a month in cash flow on $100,000 invested. A second check with smaller numbers: $6,000 of annual cash flow on $80,000 invested gives $6,000 ÷ $80,000 = 7.50% — a solid but noticeably lower return, which is exactly the kind of comparison this figure is built for.
FAQ
What is a good cash on cash return?
Many investors look for 8% or more, and most consider anything under about 5% weak for a rental property. The right target depends on the market: stable, high-demand areas can justify a lower return, while cheaper areas usually need a higher one to make up for slower growth and higher vacancy.
What is the difference between cash on cash return and cap rate?
Cash on cash return divides cash flow by the cash you actually invested, so it reflects your down payment and mortgage. Cap rate divides net operating income by the full property price and ignores financing entirely. The same property can have a 6% cap rate and a 12% cash on cash return if you bought it with a small down payment.
Does cash on cash return include the mortgage?
Yes, in the expenses. The monthly mortgage payment is part of the costs subtracted from the rent, so the cash flow is what is left after the loan is paid. The loan itself is not part of the cash invested — only your down payment, closing costs, and rehab are.
Is cash on cash return before or after tax?
Before tax, as calculated here. Depreciation, deductions, and your tax bracket can change the after-tax result considerably, so treat this figure as a pre-tax comparison tool rather than a promise of what lands in your bank account after tax.
Why is my cash on cash return negative?
Because the property costs more each year than it earns — the expenses are higher than the rental income. A negative return means you are paying out of pocket every month to hold the property, which only makes sense if you are counting on the value rising enough to cover the losses.