Cash on Cash Return Calculator: Measuring Real Investment Returns
Understand cash on cash return for rental properties. Learn the formula, benchmarks, and how to calculate your actual cash yield on invested capital.
What Is Cash on Cash Return?
Cash on cash return measures the annual pre-tax cash flow you receive relative to the total cash you invested in a property. Unlike cap rate, it accounts for your financing structure — making it the metric most relevant to leveraged buy-and-hold investors.
If you put $50,000 down and earn $4,000 in annual cash flow after all expenses and debt service, your cash on cash return is 8%.
Cash on Cash Return Formula
Cash on Cash Return = Annual Pre-Tax Cash Flow ÷ Total Cash Invested
Total cash invested includes your down payment, closing costs, renovation costs, and any reserves you put into the deal at acquisition. Annual cash flow is rent collected minus operating expenses and mortgage payments.
Cash on Cash vs. Cap Rate
Cap rate ignores financing entirely — it is a property-level metric. Cash on cash return reflects how your specific deal structure performs. A property with a 7% cap rate might deliver a 12% cash on cash return with favorable leverage, or a negative return if the loan terms are unfavorable.
Smart investors evaluate both. Cap rate tells you about the asset. Cash on cash tells you about your deal.
Benchmarks and Best Practices
Many buy-and-hold investors target 8–12% cash on cash return in cash-flow markets. Appreciation-focused markets may accept lower current returns in exchange for long-term equity growth.
Use our cash on cash calculator to model different down payment amounts, rent scenarios, and expense assumptions. Small changes in rent or interest rate can significantly shift your actual returns.
Try the Calculator
Put these concepts into practice with our interactive tool.
Open Cash on Cash Return