Investing in real estate is one of the most reliable ways to build wealth, but not all rental properties are created equal. To determine if a specific property is a good investment, you need to look beyond the monthly rent check and analyze the actual return on your invested capital. This is where our Cash on Cash Return Calculator becomes an essential tool for investors.
What is Cash on Cash Return? It is a metric used in real estate transactions that calculates the cash income earned on the cash invested in a property. Unlike ROI, which might include equity buildup, Cash on Cash focuses strictly on the liquidity and cash flow relative to your initial out-of-pocket investment.
Purchase & Investment Details
Loan Details
Income & Expenses (Monthly)
(Taxes, Insurance, Vacancy, Repairs, Mgmt)
Investment Analysis
Total Cash Invested:–
Monthly Mortgage Payment (P&I):–
Total Monthly Expenses (Operating + Loan):–
Monthly Cash Flow:–
Annual Cash Flow:–
Cash on Cash Return:–
How to Interpret Your Results
Understanding the output of the Cash on Cash Return Calculator is vital for decision-making:
8-12% Return: Generally considered a solid return for a rental property in many markets, outpacing standard stock market index fund returns on average.
Below 5%: This may indicate the property is overpriced, the rent is too low, or expenses are too high. However, in high-appreciation markets, investors might accept lower cash flow.
Above 15%: exceptional returns, often found in riskier markets or properties requiring significant sweat equity (BRRRR strategy).
The Formula Used
This calculator uses the standard real estate formula:
Cash on Cash Return = Annual Pre-Tax Cash Flow / Total Cash Invested
Total Cash Invested includes your down payment, closing costs, and any immediate repair or rehabilitation costs needed to get the property rented.
Annual Pre-Tax Cash Flow is calculated by taking the total annual rental income and subtracting all operating expenses (taxes, insurance, maintenance, vacancy, management) and debt service (mortgage payments).
Why Use Cash on Cash vs. ROI?
While Return on Investment (ROI) often accounts for the mortgage principal paydown and potential property appreciation, Cash on Cash Return gives you a "right now" picture of how hard your money is working. It answers the question: "If I put $50,000 into this house, how much spendable cash will I get back this year?" This makes it the superior metric for investors focused on passive income and financial freedom.
function calculateCoC() {
// 1. Get Input Values
var purchasePrice = parseFloat(document.getElementById('purchasePrice').value);
var downPayment = parseFloat(document.getElementById('downPayment').value);
var closingCosts = parseFloat(document.getElementById('closingCosts').value);
var rehabCosts = parseFloat(document.getElementById('rehabCosts').value);
var interestRate = parseFloat(document.getElementById('interestRate').value);
var loanTerm = parseFloat(document.getElementById('loanTerm').value);
var monthlyRent = parseFloat(document.getElementById('monthlyRent').value);
var otherIncome = parseFloat(document.getElementById('otherIncome').value);
var monthlyOpExpenses = parseFloat(document.getElementById('monthlyExpenses').value);
// 2. Validation
if (isNaN(purchasePrice) || isNaN(downPayment) || isNaN(monthlyRent)) {
alert("Please enter valid numbers for the required fields.");
return;
}
// 3. Logic Calculation
// A. Calculate Loan Amount
var loanAmount = purchasePrice – downPayment;
// B. Calculate Monthly Mortgage Payment (Principal & Interest)
// Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
// i = monthly interest rate, n = number of payments (months)
var mortgagePayment = 0;
if (loanAmount > 0 && interestRate > 0) {
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
var numerator = monthlyRate * Math.pow((1 + monthlyRate), numberOfPayments);
var denominator = Math.pow((1 + monthlyRate), numberOfPayments) – 1;
mortgagePayment = loanAmount * (numerator / denominator);
} else if (loanAmount > 0 && interestRate === 0) {
mortgagePayment = loanAmount / (loanTerm * 12);
}
// C. Calculate Total Monthly Expenses (Operating + Mortgage)
var totalMonthlyExpenses = monthlyOpExpenses + mortgagePayment;
// D. Calculate Cash Flow
var totalMonthlyIncome = monthlyRent + otherIncome;
var monthlyCashFlow = totalMonthlyIncome – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// E. Calculate Total Cash Invested
var totalCashInvested = downPayment + closingCosts + rehabCosts;
// F. Calculate Cash on Cash Return
var cocReturn = 0;
if (totalCashInvested > 0) {
cocReturn = (annualCashFlow / totalCashInvested) * 100;
}
// 4. Update UI
document.getElementById('resTotalInvested').innerHTML = "$" + totalCashInvested.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById('resMortgage').innerHTML = "$" + mortgagePayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resTotalExpenses').innerHTML = "$" + totalMonthlyExpenses.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
var cashFlowEl = document.getElementById('resCashFlow');
cashFlowEl.innerHTML = "$" + monthlyCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
if(monthlyCashFlow < 0) { cashFlowEl.style.color = "#dc3545"; } else { cashFlowEl.style.color = "#2c3e50"; }
var annualCashFlowEl = document.getElementById('resAnnualCashFlow');
annualCashFlowEl.innerHTML = "$" + annualCashFlow.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
if(annualCashFlow < 0) { annualCashFlowEl.style.color = "#dc3545"; } else { annualCashFlowEl.style.color = "#2c3e50"; }
var cocEl = document.getElementById('resCoC');
cocEl.innerHTML = cocReturn.toFixed(2) + "%";
if(cocReturn < 0) { cocEl.style.color = "#dc3545"; } else { cocEl.style.color = "#166534"; }
// Show Results Area
document.getElementById('resultsArea').style.display = 'block';
}
{
"@context": "https://schema.org",
"@type": "FAQPage",
"mainEntity": [{
"@type": "Question",
"name": "What is a good Cash on Cash Return for rental property?",
"acceptedAnswer": {
"@type": "Answer",
"text": "Most investors aim for a Cash on Cash return between 8% and 12%. Returns above 12% are considered excellent, while returns below 5-6% may be acceptable in markets with high appreciation potential."
}
}, {
"@type": "Question",
"name": "Does Cash on Cash return include mortgage principal paydown?",
"acceptedAnswer": {
"@type": "Answer",
"text": "No, Cash on Cash return only calculates the liquid cash income relative to the cash invested. It does not account for the wealth generated through mortgage principal reduction or property appreciation."
}
}, {
"@type": "Question",
"name": "How do I calculate total cash invested?",
"acceptedAnswer": {
"@type": "Answer",
"text": "Total cash invested is the sum of your down payment, closing costs, inspection fees, and any initial repair or renovation costs paid out of pocket to make the property rentable."
}
}]
}