How much cash does your rental property actually put in your pocket each year relative to what you invested? Our free cash on cash return calculator answers that question instantly — using your real down payment, closing costs, rental income, operating expenses, and mortgage payment to reveal your true CoC return.
Price: $200,000 · Down: 20% ($40,000) · Closing: $5,000 · Rent: $24,000/yr · Expenses: $6,000/yr · Mortgage: $1,000/mo
Total cash invested = $40,000 + $5,000 = $45,000
NOI = $24,000 − $6,000 = $18,000
Annual debt service = $1,000 × 12 = $12,000
Annual pre-tax cash flow = $18,000 − $12,000 = $6,000
CoC = $6,000 ÷ $45,000 = 13.3% — a strong return for a rental property.
Price: $250,000 · Down: 10% ($25,000) · Closing: $6,000 · Rent: $18,000/yr · Expenses: $8,000/yr · Mortgage: $1,150/mo
Total cash invested = $25,000 + $6,000 = $31,000
NOI = $18,000 − $8,000 = $10,000
Annual debt service = $1,150 × 12 = $13,800
Annual pre-tax cash flow = $10,000 − $13,800 = −$3,800 (the owner covers $3,800/yr out of pocket)
CoC = −$3,800 ÷ $31,000 = −12.3% — the property loses cash every year at this price and rent level.
Price: $300,000 · Down: 25% ($75,000) · Closing: $8,000 · Rent: $30,000/yr · Expenses: $9,000/yr · Loan: $225,000 @ 6.5% for 30 years
Total cash invested = $75,000 + $8,000 = $83,000
NOI = $30,000 − $9,000 = $21,000
Monthly payment = $1,422.15 → annual debt service = $17,065.80
Annual pre-tax cash flow = $21,000 − $17,065.80 = $3,934.20
CoC = $3,934.20 ÷ $83,000 = 4.7% — positive, but modest for the equity tied up.
Annual Pre-Tax Cash Flow = NOI − Annual Debt Service
NOI = Annual Rental Income − Annual Operating Expenses
Total Cash Invested = Down Payment + Closing Costs
M = Monthly mortgage payment
P = Loan amount
r = Monthly interest rate (annual rate ÷ 12 ÷ 100)
n = Total number of monthly payments (years × 12)
Cash on cash return measures the cash yield on the money you actually put into a deal. Unlike appreciation-based metrics, it ignores equity growth and tax benefits and focuses purely on how much pre-tax cash the property generates each year compared to your out-of-pocket investment.
1. Enter the purchase price and your down payment (as a % or $).
2. Add closing costs — these are real cash out the door and belong in your investment.
3. Enter annual rental income and annual operating expenses (taxes, insurance, maintenance, vacancy, management).
4. Choose your monthly mortgage payment, or let the calculator derive it from the loan amount, rate, and term.
5. Read your CoC %, NOI, annual debt service, annual cash flow, and total cash invested — with a full step-by-step breakdown.
Total cash invested must be > $0: if down payment plus closing costs is zero, there is no cash investment to measure a return against.
Negative cash flow: shown as a negative CoC — the property costs you money each year.
Down payment range: accepted between 0% and 100% (or any dollar amount up to the full purchase price).
0% interest rate: monthly payment = loan amount ÷ number of payments (no interest charged).
All-cash purchase: set the monthly payment to $0 (or the loan amount to $0) — debt service becomes $0 and CoC measures the unleveraged cash yield.
CoC focuses on the actual pre-tax cash your property generates each year. Appreciation only counts when you sell — CoC tells you what the deal pays you while you hold it.
Your true investment includes the down payment AND closing costs. Many investors forget the thousands in closing costs, which makes their returns look better than reality.
NOI isolates the property's operating performance — income minus operating expenses — before financing. It is the number lenders and appraisers watch most.
CoC lets you compare completely different properties side by side: a $50,000 down payment on one deal vs $20,000 on another — which one pays you better per dollar invested?
Cash on cash return (CoC) is one of the most important metrics in real estate investing. It measures the annual pre-tax cash flow a property produces divided by the total cash you invested to buy it — your down payment plus closing costs. Expressed as a percentage, it answers a simple question: "For every dollar of cash I put into this deal, how many cents do I get back each year?"
Because CoC measures cash against cash, it is the metric that reflects your actual bank account experience as a landlord. A property might look great on appreciation charts, but if its rent barely covers the mortgage, your CoC will be thin — or negative — and you will be funding the shortfall from your own pocket every single month.
| Scenario | Down Payment | Closing Costs | Cash Invested | Annual Cash Flow | CoC Return |
|---|---|---|---|---|---|
| 20% down | $40,000 | $5,000 | $45,000 | $6,000 | 13.3% |
| 50% down | $100,000 | $5,000 | $105,000 | $6,000 | 5.7% |
| All cash | $200,000 | $5,000 | $205,000 | $18,000 | 8.8% |
More leverage (a smaller down payment) boosts CoC because you invest less cash for the same cash flow — but it also increases risk. CoC never tells the whole story on its own.
Investors often confuse CoC with other return metrics. Each answers a different question, and using the wrong one can badly mislead your analysis of a deal.
Annual pre-tax cash flow ÷ total cash invested. Measures cash yield on your out-of-pocket money, including financing effects. This is the metric for cash-flow-focused investors and the one this calculator computes.
NOI ÷ property value. Ignores financing entirely — it measures the property's operating performance as if it were bought with all cash. Great for comparing properties in different markets, but it tells you nothing about your personal cash investment.
Total return ÷ total investment, where total return includes appreciation, principal paydown, and tax benefits in addition to cash flow. ROI paints a fuller picture but relies on estimates of future price growth.
The annualized rate that makes the net present value of all cash flows (in and out, including the eventual sale) equal zero. The most complete metric, but it requires projecting a sale price and holding period — far more assumptions than a simple CoC calculation.
Rule of thumb: use cap rate to compare markets, CoC to evaluate cash yield on your actual money, and ROI/IRR when you want the total picture including appreciation and the exit sale.
If your CoC comes back lower than you hoped, you have two levers: increase the numerator (annual cash flow) or decrease the denominator (cash invested). Every strategy below does one or both.
There is no universal target, but experienced investors generally look for 8%–12% or higher on stabilized rental properties, since that meaningfully beats most passive investments. Anything below roughly 4%–5% is often not worth the landlord headaches unless you are banking on strong appreciation. Your own target depends on your market, your risk tolerance, and whether you are optimizing for cash flow or total return.
Educational Purposes Only: This cash on cash return calculator is provided for educational and informational purposes only. Results are estimates based on the information you provide and standard financial formulas. They do not constitute financial, investment, legal, or tax advice. Real estate returns depend on many factors including actual rents, vacancy, maintenance, property taxes, insurance, mortgage terms, and market conditions that this calculator cannot predict. Always perform your own due diligence and consult with a qualified real estate or financial professional before making investment decisions.