Rental Property Cash on Cash Return Calculator
(Taxes, Ins, HOA, Vacancy, CapEx)
Total Cash Invested:
$0.00
Monthly Mortgage Payment:
$0.00
Monthly Cash Flow:
$0.00
Annual Cash Flow:
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Cash on Cash Return (CoC):
0.00%
Understanding Cash on Cash Return in Real Estate
Cash on Cash Return (CoC) is one of the most critical metrics for real estate investors. Unlike Return on Investment (ROI), which might factor in debt paydown or appreciation, CoC specifically measures the annual pre-tax cash flow generated by the property relative to the actual amount of cash you invested.
This metric answers the fundamental question: "For every dollar I put into this deal, how much cash am I getting back this year?"
How to Calculate Cash on Cash Return
The formula for Cash on Cash Return is straightforward, yet powerful:
CoC Return = (Annual Pre-Tax Cash Flow / Total Cash Invested) × 100%
To use this formula accurately, you must break down the two main components:
- Annual Pre-Tax Cash Flow: This is your Gross Rental Income minus all operating expenses (taxes, insurance, HOA fees, maintenance, vacancy) and debt service (mortgage payments).
- Total Cash Invested: This is not just the down payment. It includes closing costs, rehab or renovation costs, and any other upfront fees required to acquire the property.
Example Calculation
Let's assume you are analyzing a rental property with the following numbers:
- Purchase Price: $200,000
- Down Payment (20%): $40,000
- Closing & Rehab Costs: $10,000
- Total Cash Invested: $50,000
If the property generates $2,500 in positive cash flow per year after paying the mortgage and all expenses:
Calculation: ($2,500 / $50,000) = 0.05 or 5.00%
What is a Good Cash on Cash Return?
There is no "one size fits all" answer, as acceptable returns vary by market and investor strategy. However, general benchmarks include:
- 8-12%: Generally considered a solid return for long-term buy-and-hold investors.
- 15%+: Excellent returns, often found in lower-cost markets or properties requiring significant value-add (rehab).
- Below 5%: Might be acceptable in high-appreciation markets (like coastal cities) where investors rely more on property value growth than immediate cash flow.
Why Use Our Calculator?
This tool helps you quickly analyze deals without getting bogged down in spreadsheets. By inputting your purchase price, loan details, and expected expenses, you can instantly see if a potential rental property meets your investment criteria. Remember to estimate expenses conservatively—account for vacancy and maintenance even if the property is currently occupied and in good condition.