Rental Property Cash-on-Cash Calculator
Acquisition Costs
Monthly Income
Monthly Expenses
Gross Monthly Income:
Operating Expenses (Mo):
Net Operating Income (NOI):
Monthly Cash Flow:
Annual Cash Flow:
Total Cash Invested:
Cash-on-Cash Return:
Understanding Cash-on-Cash Return in Real Estate
When investing in rental properties, accurately calculating your return on investment (ROI) is crucial for making informed financial decisions. Unlike the stock market where metrics like P/E ratios dominate, real estate investors rely heavily on the Cash-on-Cash (CoC) Return metric. This calculator helps you determine the annual percentage return on the actual cash you have invested, providing a clear picture of your property's performance.
What is Cash-on-Cash Return?
Cash-on-Cash return is a rate of return ratio that calculates the annual cash income earned on the property in relation to the amount of mortgage paid during the same year. In simpler terms, it tells you how much cash you are getting back for every dollar you put into the deal.
The formula used in this calculator is:
Cash-on-Cash Return = (Annual Pre-Tax Cash Flow / Total Cash Invested) × 100%
How to Use This Rental Property Calculator
To get the most accurate results, ensure you have the following data points ready:
- Acquisition Costs: Include your down payment and any closing costs or immediate renovation (rehab) expenses. This forms your "Total Cash Invested."
- Operating Expenses: Be honest about vacancy rates (typically 5-8%) and maintenance reserves (CapEx). Ignoring these creates an inflated, unrealistic return.
- Debt Service: Your monthly mortgage payment (Principal and Interest) is the largest deduction from your Gross Income.
Why is a Good Cash-on-Cash Return Important?
A "good" CoC return varies by market and investor strategy. Generally, a return of 8% to 12% is considered solid in many markets, while aggressive investors may look for 15%+. This metric allows you to compare real estate opportunities against other investment vehicles, such as dividend stocks or bonds.
Example Calculation
Imagine you purchase a property for $200,000. You put $40,000 down and pay $5,000 in closing costs (Total Invested: $45,000). After paying the mortgage and all expenses, the property generates $300 in net profit per month ($3,600 per year).
Your Cash-on-Cash return would be: ($3,600 / $45,000) = 8%.