Rental Property Cash on Cash Return Calculator
Initial Investment
Monthly Income & Expenses
(Taxes, Insurance, HOA, Vacancy, Repairs)
Total Cash Invested:
Monthly Cash Flow:
Annual Cash Flow:
Cash on Cash Return:
Understanding Cash on Cash Return
Cash on Cash (CoC) return is one of the most popular metrics in real estate investing. Unlike standard Return on Investment (ROI), which might include loan paydown and property appreciation, CoC strictly measures the cash income earned on the cash invested in a property. It answers the fundamental question: "For every dollar I put into this deal, how much cash am I getting back this year?"
How the Formula Works
The calculation is relatively straightforward but requires accurate inputs to be meaningful. The formula is:
Cash on Cash Return = (Annual Pre-Tax Cash Flow / Total Cash Invested) × 100%
- Annual Pre-Tax Cash Flow: This is your gross rental income minus all operating expenses and debt service (mortgage payments). It does not include income taxes.
- Total Cash Invested: This is the actual cash you needed to close the deal. It includes your down payment, closing costs, and any immediate repair or renovation costs.
Why is CoC Return Important?
Investors use CoC return to compare the profitability of different properties or investment vehicles. For example, if the stock market historically returns 7-8%, a real estate investor might look for a CoC return of 10% or higher to justify the effort of managing a rental property. It is essentially a measure of your money's "velocity"—how fast your capital is working for you.
What is a "Good" Return?
While "good" is subjective, many real estate investors aim for a Cash on Cash return between 8% and 12%. In highly competitive markets, returns might be lower (4-6%) due to higher property prices, while in developing markets, investors might see returns upwards of 15% to compensate for higher risk.