Free calculator
Cash-on-Cash Return Calculator
Enter NOI, annual debt service, and the total cash you put into the deal to get annual cash flow and cash-on-cash return.
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How to calculate cash-on-cash return
Cash-on-cash = (NOI − Annual debt service) ÷ Total cash invested × 100
Annual pre-tax cash flow is NOI minus debt service. Divide it by every dollar you put into the deal, down payment, closing costs, and any upfront rehab or reserves, to get the return on your actual cash. At $250,000 NOI, $185,000 debt service, and $900,000 in, that is $65,000 of cash flow, a 7.2% cash-on-cash return.
Why it matters
Cap rate describes the property; cash-on-cash describes your position in it, after leverage. It is the number to compare against other uses of the same cash. Because it depends on the financing, it is also the metric creative structures move the most: a seller carry at a below-market rate, or a lower down payment, can lift cash-on-cash sharply even at the same price. That is the whole point of underwriting more than one offer structure.
Questions
What is a good cash-on-cash return?
Many private investors target 8% to 12% pre-tax cash-on-cash on stabilized income property, higher on value-add deals to compensate for execution risk. A common default screening bar is 10%.
What goes into total cash invested?
Your down payment plus closing costs plus any money spent up front on rehab, deferred maintenance, or operating reserves. Financing part of those costs (rolling them into a seller note, for instance) lowers the cash in and raises the return.
Cash-on-cash vs IRR, which should I use?
Cash-on-cash is a single-year snapshot of current yield; IRR accounts for the full hold, including appreciation, loan paydown, and the sale. Use cash-on-cash to screen, IRR to compare full business plans.
Related calculators
These calculators are quick estimators for screening. A full RVP Underwriter analysis normalizes the seller's numbers, verifies occupancy, researches your county's taxes and insurance, and prices three offer structures against your DSCR and cash-on-cash targets. Run a deal free.