When investing in rental properties, determining the profitability of a deal extends far beyond simply looking at the monthly rent. The Cash on Cash (CoC) Return is one of the most critical metrics for real estate investors. Unlike generic ROI, which might look at the total value of the asset, CoC specifically measures the annual pre-tax cash flow relative to the actual cash you have invested in the property.
This metric is essential because it tells you exactly how hard your money is working for you. For example, if you invest $50,000 in cash to acquire a property and it generates $5,000 in net positive cash flow per year, your Cash on Cash return is 10%. This allows you to compare real estate returns directly against other investment vehicles like stocks or bonds.
How the Calculator Works
This calculator breaks down the financial components of a rental property to give you a clear picture of your potential returns. Here is how we derive the numbers:
Total Cash Invested: This is the sum of your Down Payment, Closing Costs, and any immediate Rehab/Repair costs. This is the denominator in the CoC formula.
Net Operating Income (NOI): This is calculated by taking the Annual Rental Income and subtracting operating expenses (Taxes, Insurance, HOA/Maintenance) excluding the mortgage payments.
Cash Flow: We subtract the Annual Debt Service (your mortgage payments) from the NOI to find your actual pocketable cash.
Cap Rate: This measures the property's natural rate of return assuming you paid all cash. It helps compare the property's value regardless of financing structure.
Example Scenario
Consider a property listed for $250,000. You secure a loan with a 20% down payment ($50,000) and pay $5,000 in closing costs. Your total cash invested is $55,000.
If the property rents for $2,200/month ($26,400/year) and your total operating expenses plus mortgage payments equal $1,800/month, your monthly cash flow is $400.
Annualized, your cash flow is $4,800. By dividing $4,800 by your total investment of $55,000, you get a Cash on Cash return of approximately 8.7%. This calculator helps you tweak variables—like offer price or interest rate—to see how they impact this bottom line.
function calculateROI() {
// 1. Get Inputs
var price = parseFloat(document.getElementById("purchasePrice").value) || 0;
var downPercent = parseFloat(document.getElementById("downPaymentPercent").value) || 0;
var closingCosts = parseFloat(document.getElementById("closingCosts").value) || 0;
var rehabCosts = parseFloat(document.getElementById("rehabCosts").value) || 0;
var interestRate = parseFloat(document.getElementById("interestRate").value) || 0;
var loanTerm = parseFloat(document.getElementById("loanTerm").value) || 0;
var monthlyRent = parseFloat(document.getElementById("monthlyRent").value) || 0;
var annualTaxes = parseFloat(document.getElementById("annualTaxes").value) || 0;
var annualInsurance = parseFloat(document.getElementById("annualInsurance").value) || 0;
var monthlyHOA = parseFloat(document.getElementById("monthlyHOA").value) || 0;
// 2. Calculate Investment Details
var downPaymentAmount = price * (downPercent / 100);
var loanAmount = price – downPaymentAmount;
var totalCashInvested = downPaymentAmount + closingCosts + rehabCosts;
// 3. Calculate Mortgage (P&I)
// M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
var monthlyMortgage = 0;
if (interestRate === 0) {
monthlyMortgage = loanAmount / numberOfPayments;
} else {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
}
if (isNaN(monthlyMortgage)) monthlyMortgage = 0;
// 4. Calculate Expenses & Cash Flow
var monthlyTaxes = annualTaxes / 12;
var monthlyInsurance = annualInsurance / 12;
var totalMonthlyOperatingExpenses = monthlyTaxes + monthlyInsurance + monthlyHOA; // Excludes mortgage
var totalMonthlyExpenses = totalMonthlyOperatingExpenses + monthlyMortgage; // Includes mortgage
var monthlyCashFlow = monthlyRent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// 5. Calculate Metrics
var annualNOI = (monthlyRent * 12) – (totalMonthlyOperatingExpenses * 12);
// Cash on Cash Return = Annual Pre-Tax Cash Flow / Total Cash Invested
var cocReturn = 0;
if (totalCashInvested > 0) {
cocReturn = (annualCashFlow / totalCashInvested) * 100;
}
// Cap Rate = NOI / Purchase Price
var capRate = 0;
if (price > 0) {
capRate = (annualNOI / price) * 100;
}
// 6. Display Results
document.getElementById("resTotalInvested").innerText = formatCurrency(totalCashInvested);
document.getElementById("resMortgage").innerText = formatCurrency(monthlyMortgage);
document.getElementById("resTotalExpenses").innerText = formatCurrency(totalMonthlyExpenses);
document.getElementById("resMonthlyCashFlow").innerText = formatCurrency(monthlyCashFlow);
document.getElementById("resAnnualCashFlow").innerText = formatCurrency(annualCashFlow);
var cocEl = document.getElementById("resCoC");
cocEl.innerText = cocReturn.toFixed(2) + "%";
cocEl.style.color = cocReturn >= 0 ? "#2b6cb0" : "#e53e3e"; // Blue for positive, Red for negative
var capEl = document.getElementById("resCapRate");
capEl.innerText = capRate.toFixed(2) + "%";
// Show results container
document.getElementById("results").style.display = "block";
}
function formatCurrency(num) {
return "$" + num.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}