Cash-on-Cash Return Calculator
Cap rate ignores financing. Cash-on-cash return measures the one number cap rate can't: how hard your actual invested cash is working for you.
Cash-on-cash return
5.45%
Total cash invested
$66,000
What is cash-on-cash return?
Cash-on-cash return measures your annual pre-tax cash flow against the actual cash you put into the deal — your down payment plus closing costs. Unlike cap rate, it directly reflects the effect of your financing and leverage.
The formula
Cash-on-Cash Return = Annual Pre-Tax Cash Flow ÷ Total Cash Invested (down payment + closing costs).
Why it matters
Two identical properties can have very different cash-on-cash returns depending on how much you put down — more leverage (a smaller down payment) usually means a higher cash-on-cash return, at the cost of thinner cash flow margins and more risk.
Frequently asked questions
What's a good cash-on-cash return?
Many investors target 8-12% as a baseline, but it varies by market, strategy, and risk tolerance. Cash-on-cash return is most useful for comparing financing structures on the same deal, or comparing deals you're evaluating with similar financing.
How is cash-on-cash return different from cap rate?
Cap rate assumes an all-cash purchase and ignores financing entirely. Cash-on-cash return does the opposite — it measures return specifically on the cash you actually put in (down payment plus closing costs), so it directly reflects the effect of leverage. The same property can have a very different cash-on-cash return depending on how much you put down.
Does cash-on-cash return account for appreciation?
No — it's a single-year snapshot of cash flow relative to cash invested, and doesn't include equity gained through appreciation or loan paydown. For a return that accounts for the full holding period including a future sale, use an IRR calculation instead.
Want the full picture?
Cash-on-cash return is one metric. Monte Estate adds cap rate, cash flow, IRR, and a 10,000-trial Monte Carlo simulation — free to start, no credit card required.
Run a Full Analysis