Rental Property Cash on Cash Calculator
Calculate your ROI and determine if a rental property is a good investment.
Initial Investment
Income
Expenses (Monthly)
Cash on Cash Return
0.00%
Total Cash Invested:
$0.00
Monthly Cash Flow:
$0.00
Annual Cash Flow:
$0.00
Annual Net Operating Income (NOI):
$0.00
What is Cash on Cash Return?
Cash on Cash (CoC) Return is one of the most popular metrics in real estate investing. Unlike standard ROI (Return on Investment), which might look at the total value of the asset, CoC specifically measures the annual return on the actual cash you invested in the property.
This distinction is crucial for leverage. If you buy a $200,000 property but only put $40,000 down (plus closing costs), you want to know how hard that $40,000 is working for you, not just how the total $200,000 asset is performing.
How to Calculate Cash on Cash Return
The formula for Cash on Cash Return is relatively straightforward:
CoC Return = (Annual Pre-Tax Cash Flow / Total Cash Invested) x 100
- Annual Pre-Tax Cash Flow: This is your total rental income minus all operating expenses and mortgage payments (Debt Service).
- Total Cash Invested: This includes your Down Payment, Closing Costs, and any immediate Repair or Rehab costs required to get the property rented.
What is a "Good" Cash on Cash Return?
There is no single rule for what constitutes a "good" return, as it varies by market and investor strategy. However, here are general benchmarks utilized by real estate professionals:
- 8% – 12%: Generally considered a solid return in stable markets. This often beats the historical average of the stock market (S&P 500) while providing the added benefits of real estate ownership (appreciation, tax depreciation).
- 15%+: Considered an excellent return, often found in high-risk areas or through "value-add" strategies like BRRRR (Buy, Rehab, Rent, Refinance, Repeat).
- Below 5%: Might be acceptable in rapidly appreciating markets (like coastal cities) where the investor is banking on future capital gains rather than immediate cash flow.
Why Use This Calculator?
Real estate investment requires precision. A mistake in estimating maintenance costs or vacancy rates can turn a profitable deal into a money pit. By inputting specific variables for vacancy rates, management fees, and repairs, you get a realistic picture of your potential liquidity. This tool helps you avoid emotional buying by sticking to the numbers.