Rental Property Cash on Cash Return Calculator
Purchase & Loan Details
30 Years
15 Years
Income & Expenses
Investment Analysis
Total Cash Invested:
$0.00
Monthly Mortgage Payment:
$0.00
Total Monthly Expenses:
$0.00
Net Monthly Cash Flow:
$0.00
Annual Cash Flow:
$0.00
Cash on Cash Return:
0.00%
How to Calculate Cash on Cash Return
Cash on Cash Return (CoC) is one of the most important metrics for real estate investors. Unlike the "Cap Rate," which looks at the property's performance regardless of debt, CoC measures the actual return on the specific amount of cash you invested. This calculator helps you determine if a rental property will generate positive cash flow relative to your initial out-of-pocket costs.
The Formula
The formula for Cash on Cash Return is relatively straightforward:
CoC Return = (Annual Pre-Tax Cash Flow / Total Cash Invested) × 100%
Where:
- Annual Pre-Tax Cash Flow is your Gross Rent minus all operating expenses (taxes, insurance, maintenance, vacancy) and debt service (mortgage payments).
- Total Cash Invested includes your down payment, closing costs, and any immediate rehab or repair costs paid out of pocket.
Example Calculation
Imagine you buy a property for $200,000.
- You put 20% down ($40,000).
- Closing costs and minor repairs cost $5,000.
- Total Cash Invested: $45,000.
After paying the mortgage, taxes, insurance, and setting aside money for repairs, your property makes a net profit (cash flow) of $300 per month.
- Annual Cash Flow = $300 × 12 = $3,600.
- CoC Return = ($3,600 / $45,000) = 0.08 or 8%.
This means your cash is earning an 8% return annually, not including potential benefits like property appreciation or mortgage principal paydown.
What is a Good Cash on Cash Return?
While "good" is subjective, many investors aim for a CoC return between 8% and 12%. In highly competitive markets, investors might accept 5-7% anticipating appreciation, while in riskier cash-flow markets, investors might demand 15% or higher.