Real estate & rental
Real Estate Cash on Cash Return Calculator
Works cash on cash return, which measures the cash a deal returns against the cash it took.
Result
An arithmetic tool, not investment advice. Property returns depend on the local market, the condition of the building, financing terms and tax position, none of which a calculator can see. Verify the income and expense figures against actual statements rather than a seller's projection. Cash on cash counts only cash flow, so it ignores principal paydown, appreciation and tax benefits, all of which can be larger than the cash return. It is a liquidity measure rather than a total return measure.
Get a Free Business AuditHow the calculation works
Annual pre-tax cash flow divided by the cash actually invested. Cash flow here is net operating income less debt service, and the cash invested is the down payment plus closing costs and any initial work, not the purchase price. Because it includes financing, the same property produces different cash on cash returns at different leverage.
What moves the number
- Cash actually invested, including closing costs and initial work.
- Debt service, which leverage changes directly.
- Net operating income and the expense assumptions behind it.
- Whether the figure is pre-tax or after tax.
Where this one goes wrong
Leverage raises cash on cash return while the property earns more than the borrowing costs and amplifies the loss when it does not, which means a high figure reflects the financing as much as the property. It also says nothing about appreciation, principal paid down, or tax effects, so comparing a leveraged purchase against an unleveraged one on this measure alone compares two different things. Use it alongside cap rate rather than instead of it.
Before you quote
- Count closing costs and initial work in the cash invested.
- Read it alongside cap rate, which excludes financing.
- Note that it ignores appreciation, principal paydown and tax.
Questions
About this calculator
Why is my cash on cash return higher with a bigger loan?
Because leverage raises the return while the property earns more than the borrowing costs. It amplifies losses the same way, so a high figure reflects the financing structure as much as the property itself, which is worth separating before drawing conclusions.
What is not in the figure?
Appreciation, the principal being paid down each month, and tax effects including depreciation. Those can be a substantial share of the total return, which is why cash on cash describes the cash position rather than the whole result.
What counts as cash invested?
Down payment plus closing costs plus any work done before the property produced income, not the purchase price. Using the price instead of the cash actually put in understates the return substantially on a financed purchase.
The formula
cash on cash = (NOI - annual debt service) / total cash invested
Put this calculator on your site
Free to embed. Paste this where you want it to appear. It stays up to date automatically because it loads from BDEVY.
Please keep the attribution line. It is the only thing we ask in return.
How to use this calculator
- Purchase price ($). Enter your own figure; the page starts at $385,000.
- Down payment (%). Enter your own figure; the page starts at 25%.
- Closing costs and initial repairs ($). Enter your own figure; the page starts at $14,000.
- Mortgage rate (%). Enter your own figure; the page starts at 6.8%.
- Loan term (years). Enter your own figure; the page starts at 30.
- Net operating income per year ($). Enter your own figure; the page starts at $28,400.
The result updates as you type, so you can try a figure, see what it does to cash on cash return, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Purchase price | $385,000 |
| Down payment | 25% |
| Closing costs and initial repairs | $14,000 |
| Mortgage rate | 6.8% |
| Loan term (years) | 30 |
| Net operating income per year | $28,400 |
What comes out
| Result | Value |
|---|---|
| Cash on cash return main result | 5.27% |
| Cash invested | $110,250 |
| Annual mortgage payments | $22,589 |
| Annual cash flow | $5,811 |
| Monthly cash flow | $484.23 |
Cash flow of $484.23 a month on $110,250 invested, a 5.27% cash on cash return.
How sensitive the answer is
Holding everything else steady and changing only purchase price, this is what happens to cash on cash return. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Purchase price ($) | Cash on cash return |
|---|---|
| $192,500 | 27.53% |
| $288,750 | 13.29% |
| $385,000 example above | 5.27% |
| $577,500 | -3.46% |
| $770,000 | -8.13% |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Purchase price ($)
- A money amount, starting at $385,000.
- Down payment (%)
- A percentage, between 0 and 100, starting at 25%.
- Closing costs and initial repairs ($)
- A money amount, starting at $14,000.
- Mortgage rate (%)
- A percentage, between 0 and 20, starting at 6.8%.
- Loan term (years)
- A number, between 0 and 50, starting at 30.
- Net operating income per year ($)
- A money amount, starting at $28,400.
What the results tell you
| Result | What it is |
|---|---|
| Cash on cash return | The headline result. A percentage. |
| Cash invested | A money figure. |
| Annual mortgage payments | A money figure. |
| Annual cash flow | A money figure. |
| Monthly cash flow | A money figure. |
What is not in this number
Property figures here exclude the costs that decide whether a deal works: vacancy, maintenance, management, capital expenditure and the transaction costs at both ends. A return that looks strong before those frequently does not survive them.
Keep going
Related calculators
All real estate & rental calculators
Real Estate Cap Rate Calculator
Works capitalisation rate, which values a property on its income and ignores how it is financed.
Open calculatorReal Estate DSCR Calculator
Works debt service coverage ratio, which is how a lender decides whether the income supports the loan.
Open calculatorReal Estate Rental Property Calculator
Works a rental property's performance, where the monthly cash position is the live question.
Open calculatorEstimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.