Unlike the cap rate, cash on cash return accounts for financing, so it shows the return on your own money. Many investors look for 8–12%.
How to use the Cash on Cash Return Calculator
- Net operating income (yearly)
- Annual mortgage payments
- Down payment
- Closing costs
- Repairs and other upfront costs
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the net operating income, annual mortgage payments and the cash you invested.
Tips
- Get a written loan estimate and compare the APR, not just the interest rate.
- Include property tax, insurance, HOA fees and maintenance in your monthly budget.
- A larger down payment lowers the payment and can remove mortgage insurance.
- Rates change daily – use a current quote for the most accurate result.
Common mistakes to avoid
- Looking only at the monthly payment instead of the total cost of the loan.
- Forgetting closing costs and fees.
- Assuming home prices always rise.
Inputs explained
| Field | What to enter |
|---|---|
| Net operating income (yearly) | Amount in your currency |
| Annual mortgage payments | Amount in your currency |
| Down payment | Amount in your currency |
| Closing costs | Amount in your currency |
| Repairs and other upfront costs | Amount in your currency |
What each result means
- Annual pre-tax cash flow = [Net operating income (yearly)] – [Annual mortgage payments]
- Total cash invested = [Down payment] + [Closing costs] + [Repairs and other upfront costs]
- Cash on cash return = [Annual pre-tax cash flow]÷[Total cash invested]×100
- Monthly cash flow = [Annual pre-tax cash flow]÷12
Example values
How the main result changes when Net operating income changes and everything else stays at the example values above:
| Net operating income (yearly) | Cash on cash return (%) |
|---|---|
| 21,000 | -6 |
| 31,500 | 1 |
| 42,000 | 8 |
| 52,500 | 15 |
| 63,000 | 22 |
| 84,000 | 36 |
Formula
Annual cash flow = NOI − annual mortgage paymentsTotal cash invested = down payment + closing costs + repairsCash on cash return = annual cash flow ÷ total cash investedWorked example
Inputs — Net operating income (yearly): $42,000; Annual mortgage payments: $30,000; Down payment: $130,000; Closing costs: $12,000; Repairs and other upfront costs: $8,000.
Results — Annual pre-tax cash flow = $12,000.00; Total cash invested = $150,000.00; Cash on cash return = 8 %; Monthly cash flow = $1,000.00.
Frequently asked questions
What is a good cash on cash return?
8–12% is often considered good for rental property.
How is it different from ROI?
It ignores appreciation and loan paydown – only cash flow counts.
Does it include taxes?
No – it's a pre-tax measure.
What formula does the Cash on Cash Return Calculator use?
Annual cash flow = NOI − annual mortgage payments.