Rental Property Cash on Cash Return Calculator
Cash on Cash Return (CoC)
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Total Cash Invested
$0
Monthly Mortgage Payment
$0
Monthly Cash Flow
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Annual Cash Flow
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What is Cash on Cash Return in Real Estate?
Cash on Cash Return (CoC) is a fundamental metric used by real estate investors to calculate the annual return they made on the property in relation to the amount of mortgage paid during the same year. It is considered one of the most important figures to understand because it focuses strictly on the cash actually invested, rather than the total purchase price of the property.
The Cash on Cash Return Formula
The calculation is relatively straightforward but requires accurate inputs for both your income and your initial capital expenditures. The formula is:
Cash on Cash Return = (Annual Pre-Tax Cash Flow / Total Cash Invested) × 100
Understanding the Inputs
- Annual Pre-Tax Cash Flow: This is your gross rental income minus all operating expenses and debt service (mortgage payments). It represents the profit you take home before income taxes.
- Total Cash Invested: This is the total amount of liquidity you used to acquire the property. It includes your down payment, closing costs, and any immediate repair or rehabilitation costs required to make the property rentable.
Why is CoC Different from ROI?
While Return on Investment (ROI) often looks at the total wealth generated (including principal paydown and appreciation), Cash on Cash return focuses purely on liquidity. It answers the question: "For every dollar I put into this deal, how many dollars do I get back in my pocket this year?" This makes it essential for investors focusing on passive income and cash flow.
What is a Good Cash on Cash Return?
A "good" return varies by market and investor strategy, but generally:
- 8-12%: Considered a solid return in most stable residential markets.
- 15%+: Often seen in riskier markets or properties requiring significant rehabilitation (BRRRR strategy).
- Below 5%: Might be acceptable in high-appreciation markets like San Francisco or NYC, but generally considered low for cash-flow focused investors.
Use our calculator above to analyze potential deals quickly and determine if a rental property meets your specific investment criteria.