Tiny Toolkit

Cash-on-Cash Return Calculator — Rental Property ROI

Cash-on-cash return measures how much annual cash flow you earn relative to the money you actually invested — your down payment and closing costs, not the full property value. It's the single most useful metric for comparing rental properties because it accounts for financing. Enter your annual cash flow and total cash invested to get the percentage return, alongside a benchmark rating against typical buy-and-hold targets.

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Frequently Asked Questions

What is cash-on-cash return?
Cash-on-cash return is the ratio of annual pre-tax cash flow to the total cash invested. Unlike cap rate, it accounts for your financing terms — so two investors buying the same property with different down payments or loan rates will have different cash-on-cash returns.
What counts as total cash invested?
Everything out of pocket: down payment, closing costs, inspection fees, initial repairs or improvements, and any other upfront costs. Do not include the loan amount — only the cash you actually wrote a check for.
What is a good cash-on-cash return?
Most investors target 8–12% as a reasonable threshold for buy-and-hold rentals. Below 6% is generally considered weak — you might do better in a high-yield savings account with far less hassle. Above 15% is exceptional and often signals either a great deal or an underestimated expense.
How is cash-on-cash return different from cap rate?
Cap rate ignores financing entirely — it divides net operating income by property value. Cash-on-cash return uses actual cash flow after debt service and divides by the cash you invested. Cap rate is used to value properties and compare markets; cash-on-cash is used to evaluate the return on your specific investment given your financing.

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