Analyze your real estate investment potential accurately.
Purchase Information
Financing Details
30 Years
15 Years
10 Years
5 Years
Rental Income
Recurring Expenses (Monthly/Annual)
Please enter valid numerical values greater than zero where appropriate.
Investment Analysis
Cash on Cash Return
0.00%
Monthly Cash Flow
$0.00
Net Operating Income (Annual)
$0.00
Cap Rate
0.00%
Total Cash Needed
$0.00
Monthly Mortgage Payment
$0.00
Total Monthly Expenses
$0.00
Annual Cash Flow
$0.00
Understanding Cash on Cash Return in Real Estate
Investing in rental properties is a popular strategy for building wealth, but determining the profitability of a potential deal requires more than just subtracting expenses from rent. The Cash on Cash Return (CoC) is one of the most critical metrics for real estate investors, as it measures the annual return the investor made on the property in relation to the amount of mortgage paid during the same year.
What is Cash on Cash Return?
Cash on Cash return is a percentage that expresses the ratio of annual pre-tax cash flow to the total amount of cash invested. Unlike a standard Return on Investment (ROI) calculation which might look at the total value of the asset, CoC specifically focuses on the cash you actually put into the deal (down payment, closing costs, and rehab costs).
The formula is straightforward:
Cash on Cash Return = (Annual Pre-Tax Cash Flow / Total Cash Invested) × 100%
How to Interpret the Numbers
Monthly Cash Flow: This is your profit after all expenses (mortgage, taxes, insurance, vacancy, repairs) are paid. Positive cash flow is essential for a sustainable investment.
Cap Rate (Capitalization Rate): This metric evaluates the profitability of a property independent of financing. It is calculated by dividing the Net Operating Income (NOI) by the current market value or purchase price.
NOI (Net Operating Income): The annual income generated by the property after deducting all operating expenses but before deducting taxes and debt service (mortgage).
Why Use This Calculator?
Our Rental Property ROI Calculator helps you account for often-overlooked expenses such as vacancy rates (the percentage of time your property sits empty) and maintenance reserves. By inputting accurate data regarding your financing terms and operating costs, you can simulate different scenarios to decide if a property meets your investment criteria. Most seasoned investors look for a Cash on Cash return between 8% and 12%, though this varies by market.
function calculateRentalROI() {
// 1. Get Input Values
var purchasePrice = parseFloat(document.getElementById("purchasePrice").value);
var closingCosts = parseFloat(document.getElementById("closingCosts").value);
var downPaymentPercent = parseFloat(document.getElementById("downPaymentPercent").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTerm").value);
var monthlyRent = parseFloat(document.getElementById("monthlyRent").value);
var vacancyRate = parseFloat(document.getElementById("vacancyRate").value);
var annualPropertyTax = parseFloat(document.getElementById("annualPropertyTax").value);
var annualInsurance = parseFloat(document.getElementById("annualInsurance").value);
var monthlyHoa = parseFloat(document.getElementById("monthlyHoa").value);
var monthlyMaintenance = parseFloat(document.getElementById("monthlyMaintenance").value);
// Validation
if (isNaN(purchasePrice) || isNaN(monthlyRent) || isNaN(interestRate)) {
document.getElementById("errorMsg").style.display = "block";
document.getElementById("resultsSection").style.display = "none";
return;
} else {
document.getElementById("errorMsg").style.display = "none";
}
// 2. Calculate Initial Investment
var downPaymentAmount = purchasePrice * (downPaymentPercent / 100);
var loanAmount = purchasePrice – downPaymentAmount;
var totalCashInvested = downPaymentAmount + closingCosts;
// 3. Calculate Mortgage Payment (Principal & Interest)
// Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var monthlyInterestRate = (interestRate / 100) / 12;
var numberOfPayments = loanTermYears * 12;
var monthlyMortgage = 0;
if (interestRate === 0) {
monthlyMortgage = loanAmount / numberOfPayments;
} else {
monthlyMortgage = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
}
// 4. Calculate Income
var grossMonthlyIncome = monthlyRent;
var vacancyLoss = grossMonthlyIncome * (vacancyRate / 100);
var effectiveMonthlyIncome = grossMonthlyIncome – vacancyLoss;
var effectiveAnnualIncome = effectiveMonthlyIncome * 12;
// 5. Calculate Expenses
var monthlyTax = annualPropertyTax / 12;
var monthlyIns = annualInsurance / 12;
var totalMonthlyOperatingExpenses = monthlyTax + monthlyIns + monthlyHoa + monthlyMaintenance;
// Net Operating Income (NOI) = Income – Operating Expenses (Not including debt service)
var monthlyNOI = effectiveMonthlyIncome – totalMonthlyOperatingExpenses;
var annualNOI = monthlyNOI * 12;
// Total Expenses including Mortgage
var totalMonthlyExpenses = totalMonthlyOperatingExpenses + monthlyMortgage;
// 6. Calculate Cash Flow
var monthlyCashFlow = effectiveMonthlyIncome – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// 7. Calculate Metrics
var cocReturn = 0;
if (totalCashInvested > 0) {
cocReturn = (annualCashFlow / totalCashInvested) * 100;
}
var capRate = 0;
if (purchasePrice > 0) {
capRate = (annualNOI / purchasePrice) * 100;
}
// 8. Display Results
document.getElementById("resultsSection").style.display = "block";
// Formatting function
var formatCurrency = function(num) {
return "$" + num.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
};
var formatPercent = function(num) {
return num.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2}) + "%";
};
document.getElementById("resCocReturn").innerText = formatPercent(cocReturn);
document.getElementById("resMonthlyCashFlow").innerText = formatCurrency(monthlyCashFlow);
document.getElementById("resAnnualCashFlow").innerText = formatCurrency(annualCashFlow);
document.getElementById("resNoi").innerText = formatCurrency(annualNOI);
document.getElementById("resCapRate").innerText = formatPercent(capRate);
document.getElementById("resTotalCash").innerText = formatCurrency(totalCashInvested);
document.getElementById("resMortgage").innerText = formatCurrency(monthlyMortgage);
document.getElementById("resTotalExp").innerText = formatCurrency(totalMonthlyExpenses);
// Visual indicator for cash flow
var cashFlowElement = document.getElementById("resMonthlyCashFlow");
if(monthlyCashFlow < 0) {
cashFlowElement.style.color = "#c0392b";
} else {
cashFlowElement.style.color = "#2c3e50";
}
}