Rental Property Cash on Cash Return Calculator
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Rental Property Cash on Cash Return Calculator
Investment Analysis
Total Cash Invested:
$0.00
Monthly Mortgage Payment:
$0.00
Total Monthly Expenses:
$0.00
Monthly Cash Flow:
$0.00
Annual Cash Flow:
$0.00
Cash on Cash Return:
0.00%
Understanding Cash on Cash Return
Cash on Cash Return (CoC) is one of the most important metrics for real estate investors. It measures the annual return the investor makes on the property in relation to the amount of mortgage paid during the same year. Unlike standard Return on Investment (ROI), CoC specifically analyzes the cash income earned on the cash invested.
How to Use This Calculator
This tool is designed to help you quickly analyze the potential profitability of a rental property. Here is a breakdown of the inputs required:
- Purchase Information: Enter the price of the home, your down payment, and any upfront costs like closing fees or immediate repairs.
- Loan Details: Input your mortgage interest rate and the term of the loan (usually 30 years). This calculates your principal and interest payments.
- Income & Expenses: accurately estimating rental income and ongoing expenses (taxes, insurance, HOA, vacancy) is crucial for a realistic result.
Why is Cash on Cash Return Important?
CoC Return offers a "snapshot" of an investment's performance. It is particularly useful when financing is involved because it calculates returns based on your actual cash outlay rather than the total purchase price. This helps investors compare the profitability of different properties regardless of their price points.
What is a Good Cash on Cash Return?
While "good" is subjective and varies by market, many investors look for a Cash on Cash return between 8% and 12%. In highly competitive markets, 5-7% might be acceptable if there is significant potential for appreciation. Conversely, in riskier markets, investors may demand returns upwards of 15%.
The Formula
The math behind the calculation is straightforward:
Cash on Cash Return = (Annual Pre-Tax Cash Flow / Total Cash Invested) × 100%
Total Cash Invested includes your down payment, closing costs, and rehab costs. Annual Cash Flow is your net rental income after all operating expenses and mortgage payments have been deducted.
function calculateReturns() {
// Get Inputs
var price = parseFloat(document.getElementById('purchasePrice').value) || 0;
var downPayment = parseFloat(document.getElementById('downPayment').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 otherIncome = parseFloat(document.getElementById('otherIncome').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;
var vacancyRate = parseFloat(document.getElementById('vacancyRate').value) || 0;
// 1. Calculate Total Cash Invested
var totalInvested = downPayment + closingCosts + rehabCosts;
// 2. Calculate Mortgage Payment
var loanAmount = price – downPayment;
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
var monthlyMortgage = 0;
if (loanAmount > 0 && interestRate > 0 && loanTerm > 0) {
monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else if (loanAmount > 0 && interestRate === 0) {
monthlyMortgage = loanAmount / numberOfPayments;
}
// 3. Calculate Operating Expenses
var monthlyTaxes = annualTaxes / 12;
var monthlyInsurance = annualInsurance / 12;
var vacancyCost = (monthlyRent + otherIncome) * (vacancyRate / 100);
var totalMonthlyExpenses = monthlyTaxes + monthlyInsurance + monthlyHOA + vacancyCost;
var totalMonthlyOutflow = totalMonthlyExpenses + monthlyMortgage;
// 4. Calculate Cash Flow
var grossMonthlyIncome = monthlyRent + otherIncome;
var monthlyCashFlow = grossMonthlyIncome – totalMonthlyOutflow;
var annualCashFlow = monthlyCashFlow * 12;
// 5. Calculate CoC Return
var cocReturn = 0;
if (totalInvested > 0) {
cocReturn = (annualCashFlow / totalInvested) * 100;
}
// Display Results
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
});
document.getElementById('resTotalInvested').innerText = formatter.format(totalInvested);
document.getElementById('resMortgage').innerText = formatter.format(monthlyMortgage);
document.getElementById('resMonthlyExpenses').innerText = formatter.format(totalMonthlyExpenses);
document.getElementById('resMonthlyCashFlow').innerText = formatter.format(monthlyCashFlow);
document.getElementById('resAnnualCashFlow').innerText = formatter.format(annualCashFlow);
var cocElement = document.getElementById('resCoC');
cocElement.innerText = cocReturn.toFixed(2) + "%";
// Color coding for cash flow
if (monthlyCashFlow >= 0) {
document.getElementById('resMonthlyCashFlow').style.color = "#27ae60";
document.getElementById('resAnnualCashFlow').style.color = "#27ae60";
} else {
document.getElementById('resMonthlyCashFlow').style.color = "#c0392b";
document.getElementById('resAnnualCashFlow').style.color = "#c0392b";
}
if (cocReturn >= 0) {
cocElement.style.color = "#27ae60";
} else {
cocElement.style.color = "#c0392b";
}
// Show results section
document.getElementById('resultsSection').style.display = "block";
}