Rental Property Cash on Cash Return Calculator
Purchase Information
Loan Details
30 Years
15 Years
10 Years
Rental Income & Expenses
Total Cash Invested (Down + Closing)
Monthly Mortgage Payment (P&I)
Total Monthly Expenses
Monthly Cash Flow
Annual Cash Flow
Cash on Cash Return
Understanding Cash on Cash Return in Real Estate
Cash on Cash Return (CoC) is one of the most critical metrics for real estate investors. Unlike generic Return on Investment (ROI) calculations, CoC measures the annual return the investor made on the property in relation to the amount of mortgage paid during the same year. It is considered a "cash flow" metric.
How is Cash on Cash Return Calculated?
The formula used in this calculator is:
Cash on Cash Return = (Annual Pre-Tax Cash Flow / Total Cash Invested) x 100%
- Annual Cash Flow: This is your gross rental income minus all operating expenses (taxes, insurance, HOA, maintenance, vacancy) and debt service (mortgage payments).
- Total Cash Invested: This includes your down payment, closing costs, and any immediate rehab costs required to make the property rentable.
Why Use This Calculator?
Real estate investing involves complex variables. A property might look profitable based on gross rent, but once you factor in vacancies, maintenance reserves (CapEx), and debt service, the actual cash flow can be much lower. This tool helps you:
- Analyze rental property deals quickly.
- Compare different financing scenarios (e.g., 20% down vs 25% down).
- Determine if a property meets your investment criteria (e.g., the "1% rule" or a specific yield target).
What is a "Good" Cash on Cash Return?
While answers vary based on the local market and investor goals, many professional investors look for a CoC return between 8% and 12%. In highly competitive markets, 5-7% might be acceptable if there is strong potential for appreciation. Conversely, in riskier or lower-cost markets, investors may demand 15% or higher returns to justify the effort.
Key Inputs Explained
Vacancy Rate: No property is occupied 100% of the time. We recommend setting aside 5-8% of monthly rent to account for turnover periods.
Maintenance/CapEx: Roofs leak and water heaters break. Allocating 10-15% of rent for repairs and capital expenditures ensures you aren't caught off guard by large expenses.