Short answer
Cash-on-cash return is your annual pre-tax cash flow divided by the total cash you put in, times 100. Example: a rental that nets $4,375.64 a year after the mortgage, bought with $40,000 down plus $4,800 closing costs ($44,800.00 in total), returns 9.77% cash-on-cash.
- Formula: cash-on-cash = annual cash flow after debt / total cash invested x 100.
- $4,000 of yearly cash flow on $40,000 invested is a 10% cash-on-cash return.
- More leverage raises cash-on-cash only when the cap rate beats the loan constant (about 7.98% at 7% for 30 years).
- Same 7% loan, two houses: at 20% down one returns 10.15%, the other -0.24%.
On this page
- How do I calculate cash-on-cash return?
- Cash on cash return calculator
- Worked example: cash-on-cash return on a $160,000 rental
- How does the down payment change cash-on-cash return?
- Cash on cash return vs cap rate vs ROI
- What is a good cash-on-cash return? Is 7% or 10% good?
- Common cash-on-cash mistakes
- Cash on cash return formula in Excel and Google Sheets
- A cash-on-cash calculator vs a full deal analyzer
- Step-by-step
- FAQ
How do I calculate cash-on-cash return?
Divide one year of pre-tax cash flow by the total cash you invested, then multiply by 100. Cash flow is what is left after rent, vacancy, operating costs and the mortgage payment. Cash invested is everything that left your bank account to buy the property.
Cash-on-cash return = annual pre-tax cash flow / total cash invested x 100
- Annual cash flow = (rent after vacancy - operating costs - mortgage payment) x 12.
- Total cash invested = down payment + closing costs + upfront repairs + any other cash to close.
The simplest case: $4,000 a year of cash flow on $40,000 invested.
Worked example: The bare formula: $4,000 cash flow on $40,000 invested
| Item | Value |
|---|---|
| Cash invested (input) | $40,000.00 |
| Annual cash flow (input) | $4,000.00 |
| Cash-on-cash return | 10% |
Computed with the same formulas as the free calculators on this site. Change any input in the calculator above to see your own numbers.
Cash on cash return calculator
Enter a property's price, rent, financing and costs; the calculator works out the mortgage, cash flow, cash invested and cash-on-cash return together. Defaults match Deal B below.
All inputs are assumptions until you replace them with the listing, a lender's rate quote and real tax and insurance figures. This is a calculation aid, not investment advice.
Worked example: cash-on-cash return on a $160,000 rental
Deal B is a $160,000 house renting for $1,900 a month, bought with 25% down at 7% over 30 years. Here is the calculation in order:
- Cash invested: $40,000 down (25%) + $4,800 closing costs (3%) = $44,800.00.
- Mortgage: a $120,000 loan at 7% for 30 years is $798.36 a month.
- Operating costs: vacancy 5%, management 8%, maintenance 5%, CapEx 5%, plus $2,400 tax and $1,200 insurance a year, leaving monthly NOI of $1,163.
- Cash flow: $1,163 - $798.36 = $364.64 a month, $4,375.64 a year.
- Cash-on-cash: $4,375.64 / $44,800.00 = 9.77%.
Worked example: Deal B: $160,000 house, $1,900 rent, 25% down at 7% (assumptions - use your own)
| Item | Value |
|---|---|
| Down payment % (input) | 25% |
| Closing costs % (input) | 3% |
| Repairs / rehab (input) | $0.00 |
| Interest rate % (input) | 7% |
| Loan term (years) (input) | 30 |
| Vacancy % (input) | 5% |
| Management % of rent (input) | 8% |
| Property tax a year (input) | $2,400.00 |
| Insurance a year (input) | $1,200.00 |
| Maintenance % of rent (input) | 5% |
| CapEx reserve % of rent (input) | 5% |
| HOA a month (input) | $0.00 |
| Other costs a month (input) | $0.00 |
| Purchase price (input) | $160,000.00 |
| Monthly rent (input) | $1,900.00 |
| Loan amount | $120,000.00 |
| Mortgage payment (P&I) a month | $798.36 |
| Cash invested | $44,800.00 |
| Rent after vacancy | $1,805.00 |
| Operating costs a month | $642.00 |
| Net operating income a year | $13,956.00 |
| Cap rate | 8.72% |
| Cash flow a month | $364.64 |
| Cash flow a year | $4,375.64 |
| Cash-on-cash return | 9.77% |
| Passes the 1% rule? | Yes |
| Rent as % of price | 1.19% |
| Debt service coverage ratio | 1.46 |
Computed with the same formulas as the free calculators on this site. Change any input in the calculator above to see your own numbers.
How does the down payment change cash-on-cash return?
Leverage cuts both ways. Borrowing more raises cash-on-cash only when the property's cap rate is higher than the loan constant - the yearly mortgage payment as a percentage of the loan. At 7% over 30 years the loan constant is about 7.98% (12 x PMT(7%/12, 360, 1)).
Deal B's cap rate is 8.72%, above 7.98%, so every borrowed dollar earns more than it costs:
| Down payment | Cash invested | Cash flow a year | Cash-on-cash |
|---|---|---|---|
| 20% | $36,800 | $3,736.95 | 10.15% |
| 25% | $44,800 | $4,375.64 | 9.77% |
| 50% | $84,800 | $7,569.10 | 8.93% |
| 100% (cash) | $164,800 | $13,956.00 | 8.47% |
Deal A has a cap rate of 6.33%, below 7.98%, so borrowing lowers the return. Putting less down makes it worse, down to negative cash flow:
| Down payment | Cash invested | Cash flow a year | Cash-on-cash |
|---|---|---|---|
| 20% | $57,500 | -$139.26 | -0.24% |
| 25% | $70,000 | $858.69 | 1.23% |
| 50% | $132,500 | $5,848.46 | 4.41% |
| 100% (cash) | $257,500 | $15,828.00 | 6.15% |
Worked example: Deal A: $250,000 house, $2,200 rent, 25% down at 7% (same percentages; $3,000 tax, $1,500 insurance a year)
| Item | Value |
|---|---|
| Down payment % (input) | 25% |
| Closing costs % (input) | 3% |
| Repairs / rehab (input) | $0.00 |
| Interest rate % (input) | 7% |
| Loan term (years) (input) | 30 |
| Vacancy % (input) | 5% |
| Management % of rent (input) | 8% |
| Property tax a year (input) | $3,000.00 |
| Insurance a year (input) | $1,500.00 |
| Maintenance % of rent (input) | 5% |
| CapEx reserve % of rent (input) | 5% |
| HOA a month (input) | $0.00 |
| Other costs a month (input) | $0.00 |
| Purchase price (input) | $250,000.00 |
| Monthly rent (input) | $2,200.00 |
| Loan amount | $187,500.00 |
| Mortgage payment (P&I) a month | $1,247.44 |
| Cash invested | $70,000.00 |
| Rent after vacancy | $2,090.00 |
| Operating costs a month | $771.00 |
| Net operating income a year | $15,828.00 |
| Cap rate | 6.33% |
| Cash flow a month | $71.56 |
| Cash flow a year | $858.69 |
| Cash-on-cash return | 1.23% |
| Passes the 1% rule? | No |
| Rent as % of price | 0.88% |
| Debt service coverage ratio | 1.06 |
Computed with the same formulas as the free calculators on this site. Change any input in the calculator above to see your own numbers.
Two notes on the tables. The all-cash return sits slightly below the cap rate because closing costs add to cash invested but not to NOI. And a higher cash-on-cash at low down payments also means a thinner cushion: Deal B's DSCR is 1.37 at 20% down against 2.19 at 50%.
Cash on cash return vs cap rate vs ROI
Cap rate measures the property; cash-on-cash measures your cash in the deal; total ROI adds things you do not receive as cash each year. Use all three, for different questions.
| Measure | Formula | Includes the loan? | Deal B |
|---|---|---|---|
| Cap rate | NOI / price | No | 8.72% |
| Cash-on-cash | Annual cash flow / cash invested | Yes | 9.77% |
| Total ROI | (Cash flow + principal paydown + appreciation) / cash invested | Yes | Depends on appreciation you assume |
Cash-on-cash is the most conservative of the three because it counts only cash you can spend. For the full purchase picture - mortgage, NOI, DSCR and the 1% rule side by side - see the rental property analysis spreadsheet guide.
What is a good cash-on-cash return? Is 7% or 10% good?
A good cash-on-cash return is one that beats what the same cash could earn elsewhere by enough to pay you for the risk and the work. There is no universal number, and I will not quote a market average I cannot verify.
Set your own hurdle instead:
- Write down the return you can get on the same money with little effort or risk - your number, from your bank or broker.
- Add a premium for illiquidity, tenant risk and your time. How big is your call.
- Compare the deal's cash-on-cash, after realistic vacancy and repair reserves, with that hurdle.
So is 7% good? It depends on the hurdle. Is 10% good? On paper it is higher, but check what produced it. Deal B only reaches 10.15% at 20% down, with a thinner debt cushion than at 25% down. A 10% built on thin reserves or optimistic rent is weaker than 7% built on conservative inputs. This is arithmetic, not financial advice.
Common cash-on-cash mistakes
Most inflated cash-on-cash figures come from a short denominator or an optimistic numerator.
- Leaving closing costs out of cash invested. Deal B's $4,375.64 over $40,000 alone reads 10.94% instead of 9.77%. Include repairs you pay up front too.
- Using NOI instead of cash flow. NOI is before the mortgage. $13,956 of NOI over $44,800.00 would read 31.15%, a number no leveraged buyer receives.
- No vacancy, maintenance or CapEx. These are real costs that arrive irregularly. Leave them out and cash flow looks higher than it will be over several years.
- Mixing in principal paydown or appreciation. Those belong in total ROI, not cash-on-cash.
Cash on cash return formula in Excel and Google Sheets
With cash flow and cash invested already in cells, cash-on-cash is one division. The formulas below also build both halves from the inputs. Layout: B2 price, B3 down %, B4 closing %, B5 repairs, B6 monthly NOI, B7 rate, B8 years.
Cash invested
=B2*B3+B2*B4+B5B2 = price, B3 = down %, B4 = closing %, B5 = upfront repairs.
Monthly mortgage
=PMT(B7/12,B8*12,-B2*(1-B3))B7 = interest rate, B8 = loan term in years.
Cash-on-cash return
=(B6-B10)*12/B9B6 = monthly NOI, B10 = mortgage cell, B9 = cash invested cell. Format as %.
Loan constant (leverage check)
=PMT(B7/12,B8*12,-1)*12If cap rate (NOI x 12 / price) is below this, more debt lowers cash-on-cash.
To reproduce the down-payment tables, put 20%, 25%, 50% and 100% in a column and point B3 at each one, or use a one-variable data table (Excel: What-If Analysis > Data Table).
A cash-on-cash calculator vs a full deal analyzer
A single-metric calculator answers one question. A deal analyzer shows cash-on-cash next to cap rate, cash flow and the 1% rule, so you can see why the number is what it is. Free online calculators are fine for the first; a spreadsheet is better when you compare several listings and keep your assumptions.
What to put in a cash-on-cash template: price, down payment %, closing costs %, repair budget, rate and term, rent, vacancy %, management, maintenance and CapEx %, taxes and insurance, and outputs for mortgage, NOI, cash flow, cash invested, cash-on-cash and cap rate.
The rental property deal analyzer spreadsheet calculates real cash flow after taxes, insurance, vacancy, repairs and management, with cap rate, cash-on-cash and the 1% rule, colour-coded in Excel or Google Sheets for $14.99 (or in the $49 7-template bundle). Comparing a long-term let with a short-term one? The Airbnb vs long-term rental guide runs both on the same property. Either way, the cash-on-cash return calculator template keeps each deal's inputs visible so you can check the math.
Rental Property Deal Analyzer
The spreadsheet version of this guide for Excel & Google Sheets: type your numbers into the highlighted cells and the formulas do the rest. One-time $14.99, no subscription, instant download.
See the Rental Property Deal Analyzer →Buy now — $14.99All 7 templates — $49Instant access by email after checkout via Payhip.
Step-by-step: Cash-on-Cash Return Calculator: Formula, Examples and Excel
- Add up cash invested. Down payment + closing costs + upfront repairs. Deal B: $40,000 + $4,800 = $44,800.00.
- Work out the mortgage. Use =PMT(rate/12, years*12, -loan). A $120,000 loan at 7% for 30 years is $798.36 a month.
- Find monthly cash flow. Rent after vacancy - operating costs - mortgage. Deal B: $364.64 a month.
- Annualise it. Multiply by 12: $4,375.64 a year of pre-tax cash flow.
- Divide and compare. $4,375.64 / $44,800.00 = 9.77%. Compare it with your own hurdle rate and with the cap rate.
Skip the setup: Rental Property Deal Analyzer
The spreadsheet version of this guide for Excel & Google Sheets: type your numbers into the highlighted cells and the formulas do the rest. One-time $14.99, no subscription, instant download.
See the Rental Property Deal Analyzer →Buy now — $14.99All 7 templates — $49Instant access by email after checkout via Payhip.
Frequently asked questions
How do I calculate my cash-on-cash return?
Divide your annual pre-tax cash flow, after the mortgage, by the total cash you invested, and multiply by 100. $4,375.64 of yearly cash flow on $44,800.00 invested is a 9.77% cash-on-cash return.
What is a 10% cash-on-cash return?
It means the property pays you, in cash each year, 10% of the money you put in. $4,000 of annual cash flow on $40,000 invested is 10%. It excludes appreciation and principal paydown, which count toward total return instead.
Is a 7% cash-on-cash return good?
It depends on your alternatives and on how the 7% was calculated. Compare it with what the same cash earns elsewhere plus a premium for risk and work. A 7% built on realistic vacancy and repair reserves can be stronger than a higher figure built on optimistic rent.
What is the difference between cash-on-cash return and cap rate?
Cap rate is NOI divided by price and ignores financing. Cash-on-cash is cash flow after the mortgage divided by your cash invested, so it changes with your down payment and rate. Deal B has a 8.72% cap rate and 9.77% cash-on-cash at 25% down.
How do I calculate cash-on-cash return in Excel?
Put annual cash flow in one cell and total cash invested in another, then divide: =B2/B3, formatted as a percentage. To build cash flow, use =PMT(rate/12, years*12, -loan) for the mortgage and subtract it from monthly NOI before multiplying by 12.
Does a bigger down payment increase cash-on-cash return?
Only when the cap rate is below the loan constant. On a 7%, 30-year loan the constant is about 7.98%. Deal A (6.33% cap) rises from 1.23% to 4.41% going from 25% to 50% down; Deal B (8.72% cap) falls from 9.77% to 8.93%.
How do I calculate free cash flow from operating cash flow?
Free cash flow is operating cash flow minus capital expenditures. For a rental, a CapEx reserve line (roof, HVAC, appliances) plays the same role, which is why cash flow in this calculator already subtracts a CapEx percentage before cash-on-cash is worked out.
I'm not a contractor, landlord or accountant. I build the pricing maths, and every number on this page shows its working so you can check it instead of trusting it. Watch the breakdowns on YouTube →