Rental Property Cash on Cash Calculator
Purchase Details
Financing
Income & Expenses
(Taxes, Insurance, HOA, Repairs)
Cash on Cash Return
0.00%
Total Cash Invested (Down + Closing)
$0.00
Monthly Mortgage Payment
$0.00
Monthly Cash Flow
$0.00
Annual Net Operating Income (NOI)
$0.00
How to Calculate Cash on Cash Return
Understanding the profitability of a rental property is crucial for real estate investors. The Cash on Cash Return (CoC) metric is one of the most popular ways to evaluate a deal because it tells you exactly how hard your actual invested money is working for you, unlike Cap Rate which looks at the property's total value.
This calculator breaks down your investment into the specific cash inflows and outflows to determine your percentage return. A positive monthly cash flow indicates a potentially safe investment, while a high CoC percentage suggests excellent leverage of your capital.
The Formula Behind the Numbers
Our calculator uses a specific logic flow to determine your returns. Here is how we arrive at the result:
- Step 1: Determine Total Cash Invested. This is the sum of your down payment and your closing costs (inspections, title fees, bank fees).
- Step 2: Calculate Mortgage Payment. We use a standard amortization formula based on your loan amount (Price minus Down Payment), interest rate, and loan term.
- Step 3: Calculate Net Operating Income (NOI). This is your Annual Rent (adjusted for vacancy) minus operating expenses (taxes, insurance, maintenance). Note: NOI does not include mortgage payments.
- Step 4: Determine Annual Cash Flow. We take the NOI and subtract your total annual debt service (mortgage payments).
- Step 5: Divide and Conquer. Finally, we divide the Annual Cash Flow by the Total Cash Invested to get your Cash on Cash Return percentage.
What is a Good Cash on Cash Return?
While "good" is subjective and depends on the economy and location, many professional investors aim for:
- 8-12%: Generally considered a solid return in most stable markets.
- 15%+: Considered an excellent return, often found in riskier markets or deals requiring significant rehabilitation (BRRRR strategy).
- Below 5%: Often considered weak for a pure cash-flow play, though investors might accept this if they are banking on high property appreciation.
Input Definitions
Vacancy Rate: No property is occupied 100% of the time. A standard conservative estimate is 5% (about 2-3 weeks vacant per year) to 8% (one month vacant).
Monthly Expenses: Be sure to include property taxes, landlord insurance, HOA fees, property management fees (usually 8-10% of rent), and a reserve budget for repairs (maintenance).