How it works
Cash-on-cash return measures cash income relative to actual cash committed. It does not include unrealized value increases or principal paydown as spendable cash flow.
The formula
Keep currency, units and time periods consistent. Percentage inputs use percentage points (enter 5 for 5%). Results are rounded only for display; tiny nonzero values may use scientific notation. Undefined ratios are shown as unavailable.
$12,000 annual pre-tax cash flow and $150,000 cash invested ($120,000 down plus $30,000 initial costs) produce 8.00% cash-on-cash and $1,000 average monthly cash flow.
Calculation method
Include the down payment and cash-funded closing, renovation and reserve contributions. A financed cost belongs in loan economics, not again in cash invested. The rental-operations mode builds cash flow before dividing.
Interpretation
Zero cash invested has no meaningful percentage denominator. Negative cash flow produces a negative return when invested cash is positive. The dollar income remains visible even when the ratio is unavailable.
Limitations
All rents, values, vacancy, expenses and financing terms are your assumptions. Figures exclude income tax and appreciation. Inputs stay in your browser. These calculations do not predict loan approval or investment outcomes.
Method and reference sources
Method and content checked 2026-09-20. These sources provide background, not endorsement or professional certification. The formula and limitations above define this calculator.
- CFPB — How lenders calculate mortgage paymentsLoan principal-and-interest context; property operating expenses and underwriting assumptions are separate.
Frequently asked questions
Which cash should be included in cash invested?
Include the actual acquisition and startup cash represented by your scenario, such as down payment and entered closing or rehabilitation costs. Do not use total property value as cash invested when borrowing is involved.
What is a worked example for Cash-on-Cash Return?
$12,000 annual pre-tax cash flow and $150,000 cash invested ($120,000 down plus $30,000 initial costs) produce 8.00% cash-on-cash and $1,000 average monthly cash flow.