function calculateCashOnCash() {
// Clear error
var errorDiv = document.getElementById('errorDisplay');
var resultsDiv = document.getElementById('resultsDisplay');
errorDiv.style.display = 'none';
resultsDiv.style.display = 'none';
// Get Inputs
var price = parseFloat(document.getElementById('purchasePrice').value);
var down = parseFloat(document.getElementById('downPayment').value);
var closing = parseFloat(document.getElementById('closingCosts').value);
var repairs = parseFloat(document.getElementById('repairCosts').value);
var rate = parseFloat(document.getElementById('interestRate').value);
var term = parseFloat(document.getElementById('loanTerm').value);
var rent = parseFloat(document.getElementById('monthlyRent').value);
var expenses = parseFloat(document.getElementById('monthlyExpenses').value);
// Validation
if (isNaN(price) || isNaN(down) || isNaN(closing) || isNaN(rate) || isNaN(term) || isNaN(rent) || isNaN(expenses)) {
errorDiv.innerHTML = "Please fill in all fields with valid numbers.";
errorDiv.style.display = 'block';
return;
}
// Handle optional rehab costs (treat NaN as 0)
if (isNaN(repairs)) repairs = 0;
// 1. Calculate Total Cash Invested
var totalInvested = down + closing + repairs;
if (totalInvested 0) {
var monthlyRate = (rate / 100) / 12;
var numPayments = term * 12;
if (monthlyRate === 0) {
monthlyMortgage = loanAmount / numPayments;
} else {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numPayments)) / (Math.pow(1 + monthlyRate, numPayments) – 1);
}
}
// 3. Calculate Cash Flow
var totalMonthlyExpenses = monthlyMortgage + expenses;
var monthlyCashFlow = rent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// 4. Calculate Cash on Cash Return
var cocReturn = (annualCashFlow / totalInvested) * 100;
// Display Results
document.getElementById('resTotalInvested').innerHTML = "$" + totalInvested.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resMortgage').innerHTML = "$" + monthlyMortgage.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
var monthlyFlowEl = document.getElementById('resMonthlyCashFlow');
monthlyFlowEl.innerHTML = "$" + monthlyCashFlow.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
monthlyFlowEl.style.color = monthlyCashFlow >= 0 ? "#2c3e50" : "#c0392b";
var annualFlowEl = document.getElementById('resAnnualCashFlow');
annualFlowEl.innerHTML = "$" + annualCashFlow.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
annualFlowEl.style.color = annualCashFlow >= 0 ? "#2c3e50" : "#c0392b";
var cocEl = document.getElementById('resCoC');
cocEl.innerHTML = cocReturn.toFixed(2) + "%";
cocEl.style.color = cocReturn >= 0 ? "#27ae60" : "#c0392b";
resultsDiv.style.display = 'block';
}
Understanding Cash on Cash Return
For real estate investors, Cash on Cash (CoC) Return is one of the most critical metrics used to evaluate the potential profitability of an income-generating property. Unlike a simple Return on Investment (ROI) which might look at the total value of the asset, CoC specifically measures the annual return the investor made on the property in relation to the amount of mortgage paid during the same year. It essentially answers the question: "For every dollar of cash I actually put into this deal, how much cash am I getting back this year?"
How the Calculation Works
The formula for Cash on Cash Return is relatively straightforward but requires accurate inputs regarding your initial investment and operating costs:
Annual Pre-Tax Cash Flow: This is the total gross rent minus all operating expenses (vacancy, management, repairs, taxes, insurance) and debt service (mortgage payments).
Total Cash Invested: This includes your down payment, closing costs, and any immediate rehab or repair costs paid out of pocket to get the property rent-ready.
The formula is: CoC Return = (Annual Pre-Tax Cash Flow / Total Cash Invested) × 100%
Why It's Different from Cap Rate
Many new investors confuse Cash on Cash Return with Capitalization Rate (Cap Rate). While Cap Rate measures the property's natural rate of return assuming an all-cash purchase, CoC Return takes into account the leverage (mortgage). This makes CoC a superior metric for investors using financing, as it reflects the efficiency of their specific capital employed in the deal.
Real World Example:
Imagine you buy a property for $200,000.
Down Payment (20%): $40,000
Closing & Rehab Costs: $10,000
Total Cash Invested: $50,000
If the property generates $1,500/month in positive cash flow after paying the mortgage and all expenses:
Annual Cash Flow: $18,000
CoC Calculation: $18,000 / $50,000 = 0.36 or 36%
This means you are earning a 36% return on your invested cash annually, typically outperforming the stock market significantly.
What is a Good Cash on Cash Return?
"Good" is subjective and depends on the market and the investor's goals. However, many real estate experts consider a CoC return of 8-12% to be solid for residential rentals. Returns above 15% are often considered excellent but may require more active management or investing in riskier neighborhoods. Conversely, in high-appreciation markets (like coastal cities), investors might accept lower CoC returns (3-5%) banking on long-term property value growth instead of immediate cash flow.