Cash-on-Cash Return Calculator
Model stabilized rent, operating expenses, acquisition cash, and a fixed-rate amortizing loan, then read cash-on-cash next to cap rate to see how financing changes your yield.
100% client-side. Inputs stay in your browser (ons-cash-on-cash-inputs).
Pair NOI with a fully amortizing mortgage, then read cash-on-cash on actual cash invested next to an unlevered cap rate benchmark.
This property generates $833 per year in cash after operating expenses and mortgage (pre-tax).
Cash-on-cash
1.51%
Annual pre-tax cash flow ÷ cash invested at acquisition.
Cap rate (same NOI)
6.72%
NOI ÷ purchase price, ignores financing.
Financing effect: -5.21 pts vs cap. Financing is reducing your return, your mortgage cost likely swamps the cap rate you are buying.
NOI
$16,800
Annual cash flow
$833
Annual debt service
$15,967
$1,331/mo P&I
Total cash invested
$55,000
Down payment + closing + rehab
Cash flow breakdown
Compare NOI to full annual debt service; the net bar is what feeds cash-on-cash.
Loan balance modeled: $200,000 · Effective gross income $22,800 after $1,200 vacancy loss.
How this tool works
The calculator builds your return in layers. First, it computes net operating income (NOI) the same way a cap rate calculator does: gross rent minus vacancy loss minus operating expenses. Then it goes one step further by subtracting your annual mortgage payment to get annual cash flow. This is the money that actually lands in your bank account each year. Next, it totals your cash invested: down payment plus closing costs plus any upfront rehab. Cash-on-cash return is your annual cash flow divided by that total cash invested. The tool also computes cap rate (NOI divided by purchase price) and displays both numbers together. The difference between them is the leverage effect. When your mortgage interest rate is lower than the cap rate, leverage boosts your return, and cash-on-cash will be higher than cap rate. When your mortgage rate is higher than the cap rate, leverage drags your return down, and cash-on-cash will be lower. This side-by-side comparison answers a key question most investors face: is financing this deal helping or hurting me?
Worked example
A $250,000 property with $24,000 annual gross rent, 5% vacancy, and $6,000 in operating expenses produces an NOI of $16,800 and a cap rate of 6.72%. With a 20% down payment ($50,000), a 7% 30-year loan on $200,000, and $5,000 in closing costs, the annual debt service is approximately $15,972. Annual cash flow is $828, and cash-on-cash return is 1.51% on $55,000 invested. The leverage effect is negative at -5.21%, meaning financing reduces the return compared to an all-cash purchase. If the interest rate drops to 5%, cash flow jumps to $3,917 and cash-on-cash climbs to 7.12%, flipping the leverage effect to positive and showing how sensitive the return is to borrowing costs.
Frequently asked questions
What is cash-on-cash return?
Your annual pre-tax cash flow divided by total cash invested, expressed as a percentage. It measures the actual return on the money you put into the deal, including the effect of your mortgage. If you invest $55,000 and the property produces $828 per year in cash flow, your cash-on-cash return is 1.51%.
What is a good cash-on-cash return?
Most investors target 8-12%. Below 6% is generally considered weak for a leveraged investment. Above 12% is strong. These benchmarks assume typical residential properties. In high-interest-rate environments, achieving 8% or more often requires a higher cap rate property or a larger down payment. Compare this figure across multiple properties in the same market and asset class before drawing conclusions about relative value.
How is cash-on-cash different from cap rate?
Cap rate ignores financing entirely. It measures the property's return as if you paid all cash. Cash-on-cash measures the return on your actual out-of-pocket dollars after debt service. The two numbers converge when you buy with 100% cash and diverge as you add leverage.
What is negative cash flow?
When your mortgage plus expenses exceed your rental income. The property costs you money each month. Some investors accept this if they expect strong appreciation, but it means your cash-on-cash return is negative and you need reserves to cover the shortfall. Compare this figure across multiple properties in the same market and asset class before drawing conclusions about relative value.
Can cash-on-cash return be higher than cap rate?
Yes, and that is the point of leverage when it works in your favor. If your mortgage rate is below the cap rate, financing amplifies your return. Your cash-on-cash will exceed the cap rate because you are earning the property's full NOI on a smaller cash base.
How do I improve my cash-on-cash return?
Three main levers: increase rent (higher NOI), reduce expenses (higher NOI), or reduce your interest rate (lower debt service). A fourth option is putting less money down, which reduces cash invested but increases your mortgage payment. The tool lets you test all four scenarios instantly. Run this calculation for a range of purchase prices and rent assumptions to understand the sensitivity of your returns.