Rental Property Cash on Cash Return Calculator
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Total Cash Invested:
$0
Monthly Mortgage Payment:
$0
Monthly Cash Flow:
$0
Annual Net Operating Income (NOI):
$0
Cash on Cash Return (CoC):
0.00%
Cap Rate:
0.00%
function calculateROI() {
// Get Inputs
var price = parseFloat(document.getElementById('purchasePrice').value) || 0;
var closing = parseFloat(document.getElementById('closingCosts').value) || 0;
var rehab = parseFloat(document.getElementById('rehabCosts').value) || 0;
var downPercent = parseFloat(document.getElementById('downPaymentPercent').value) || 0;
var interest = parseFloat(document.getElementById('interestRate').value) || 0;
var years = parseFloat(document.getElementById('loanTerm').value) || 0;
var rent = parseFloat(document.getElementById('monthlyRent').value) || 0;
var otherInc = parseFloat(document.getElementById('otherIncome').value) || 0;
var expenses = parseFloat(document.getElementById('monthlyExpenses').value) || 0;
// Calculations
// 1. Initial Cash Invested
var downPaymentAmount = price * (downPercent / 100);
var totalInvested = downPaymentAmount + closing + rehab;
// 2. Mortgage Calculation
var loanAmount = price – downPaymentAmount;
var monthlyRate = (interest / 100) / 12;
var numberOfPayments = years * 12;
var monthlyMortgage = 0;
if (loanAmount > 0 && interest > 0) {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else if (loanAmount > 0 && interest === 0) {
monthlyMortgage = loanAmount / numberOfPayments;
}
// 3. Operating Income
var totalMonthlyIncome = rent + otherInc;
var noiMonthly = totalMonthlyIncome – expenses;
var noiAnnual = noiMonthly * 12;
// 4. Cash Flow
var monthlyCashFlow = noiMonthly – monthlyMortgage;
var annualCashFlow = monthlyCashFlow * 12;
// 5. Returns
var cocReturn = 0;
if (totalInvested > 0) {
cocReturn = (annualCashFlow / totalInvested) * 100;
}
var capRate = 0;
if (price > 0) {
capRate = (noiAnnual / price) * 100;
}
// Display Results
document.getElementById('resTotalInvested').innerText = formatCurrency(totalInvested);
document.getElementById('resMortgage').innerText = formatCurrency(monthlyMortgage);
document.getElementById('resMonthlyCashFlow').innerText = formatCurrency(monthlyCashFlow);
document.getElementById('resNOI').innerText = formatCurrency(noiAnnual);
document.getElementById('resCoC').innerText = cocReturn.toFixed(2) + "%";
document.getElementById('resCapRate').innerText = capRate.toFixed(2) + "%";
// Show result container
document.getElementById('resultContainer').style.display = "block";
}
function formatCurrency(num) {
return "$" + num.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}
Understanding Cash on Cash Return in Real Estate
For real estate investors, the purchase price of a property is just one piece of the puzzle. To truly understand the performance of a rental asset, sophisticated metrics are required. The Cash on Cash Return (CoC) is widely considered the premier metric for analyzing the immediate profitability of a real estate investment involving leverage (financing).
What is Cash on Cash Return?
Cash on Cash Return is a percentage that calculates the annual return on the actual cash you invested in the property. Unlike the Cap Rate, which looks at the total value of the property regardless of debt, CoC measures the efficiency of the specific dollars you took out of your pocket to close the deal.
The formula is simple:
Cash on Cash Return = (Annual Pre-Tax Cash Flow / Total Cash Invested) x 100
Key Components of the Calculation
- Annual Cash Flow: This is your Net Operating Income (Income minus Operating Expenses) minus your annual debt service (mortgage payments). It is the actual money left over at the end of the year.
- Total Cash Invested: This includes your Down Payment, Closing Costs, and any immediate Repair or Rehab costs incurred to get the property rent-ready.
Why Use a Rental Property Calculator?
Real estate deals often have thin margins. A miscalculation in estimated expenses or mortgage payments can turn a profitable deal into a money pit. Using a specialized Rental Property Calculator helps you:
- Stress Test Deals: See how changes in interest rates or vacancy (via operating expenses) affect your bottom line.
- Compare Opportunities: Standardizing your math allows you to compare a condo in the city against a single-family home in the suburbs objectively.
- Plan for CapEx: By including accurate operating expenses, you ensure you are saving for future roof repairs or HVAC replacements.
Cash on Cash vs. Cap Rate
While this calculator provides both, they serve different purposes:
- Cap Rate (Capitalization Rate): Measures the property's natural rate of return as if you bought it all cash. It is useful for judging the quality of the asset itself.
- Cash on Cash Return: Measures the return on your equity. It takes into account the leverage provided by your bank loan. In a low-interest-rate environment, CoC is often higher than Cap Rate due to positive leverage.
What is a Good Cash on Cash Return?
Target returns vary by investor strategy and market location. Generally:
- 8-12%: Often considered a solid benchmark for safe, long-term buy-and-hold investments.
- 15%+: Excellent returns, often found in riskier markets or properties requiring significant "sweat equity" and renovation.
- Below 5%: May be acceptable in high-appreciation markets (like coastal cities) where the investor is banking on property value growth rather than immediate cash flow.
Use the tool above to run the numbers on your potential investments before making an offer. Remember to always overestimate expenses and underestimate rent to build a margin of safety.