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Real Estate Cash on Cash Return Calculator

Purchase Information

Financing Details

Income & Expenses

Investing in real estate is a numbers game. Emotions should take a back seat to data. This Investment Property ROI Calculator is designed to help investors determine the viability of a rental property by calculating key performance metrics like Cash on Cash Return (CoC), Net Operating Income (NOI), and Capitalization Rate (Cap Rate).

Why use this tool? A simple mortgage calculator isn't enough. To truly understand if a deal makes sense, you must factor in vacancy rates, maintenance costs, taxes, insurance, and closing costs against your projected rental income.

Understanding Key Metrics

1. Cash on Cash Return (CoC)

This is arguably the most important metric for rental investors. It measures the annual return on the actual cash you invested, rather than the total purchase price. This helps you compare real estate investments against other vehicles like stocks or bonds.

Formula: Annual Pre-Tax Cash Flow / Total Cash Invested

For example, if you invest $50,000 cash (down payment + closing costs) and the property generates $5,000 in net profit per year, your CoC return is 10%.

2. Net Operating Income (NOI)

NOI calculates the profitability of the property excluding financing costs. It is the total income minus all operating expenses (taxes, insurance, maintenance, vacancy). It is crucial for determining the raw value of the asset.

3. Cap Rate (Capitalization Rate)

The Cap Rate indicates the rate of return on a real estate investment property based on the income that the property is expected to generate. It is useful for comparing properties as if they were bought with all cash.

Formula: NOI / Current Market Value

How to Use This Calculator

• Purchase Information: Enter the negotiated price and your down payment. Don't forget closing costs, which can range from 2% to 5% of the price.
• Financing Details: Current interest rates heavily impact cash flow. A higher rate increases your monthly debt service, lowering your CoC return.
• Income & Expenses: Be realistic. Always account for vacancy (typically 5-8%) and maintenance. A common mistake is assuming a property will be occupied 100% of the time with zero repairs.

What is a "Good" Return?

While this varies by market and strategy, many investors aim for a Cash on Cash return of 8-12%. In highly appreciative markets, investors might accept a lower CoC (4-6%) in exchange for future equity growth. Conversely, in stable, low-appreciation markets, investors often demand 12%+ returns to justify the risk.