Cash-on-Cash Return Calculator
See what a rental actually returns on the cash you put in. Enter the purchase price, down payment, closing and rehab costs, rent, and loan terms, and the calculator returns your annual pre-tax cash flow and cash-on-cash return — the leveraged yield on your invested dollars. It also shows the property's cap rate alongside it, so you can see at a glance whether your financing is working for you (positive leverage) or against you (negative leverage).
% of effective income — taxes, insurance, management, repairs, reserves. Not the mortgage.
Your loan constant — the annual loan payment as a share of the loan, higher than your note rate because it includes principal — is above the cap rate, so borrowing pulls your return below the all-cash yield. A bigger down payment, a lower rate, or a longer loan term can fix it.
About This Cash-on-Cash Return Calculator
Cash-on-cash return is the annual pre-tax cash flow a property produces divided by the actual cash you invested to buy it. Where cap rate measures the property as if you paid all cash, cash-on-cash is a leveraged return: it measures what each dollar you actually put into the deal earns in its first year, once the mortgage is paid. The two answer different questions and investors watch both — cap rate for the asset, cash-on-cash for the financed deal. If you invest $80,000 of cash and the property throws off $6,400 of cash flow after the mortgage in year one, your cash-on-cash return is 8%.
This calculator builds the two halves of that ratio the way an investor would. On the income side, it annualizes the rent, subtracts a vacancy allowance and operating expenses to get net operating income, then subtracts the mortgage payment (principal and interest) to arrive at annual pre-tax cash flow. On the investment side, it adds up the cash you actually bring to the table: down payment, closing costs, and any upfront rehab. Cash flow divided by cash invested is your cash-on-cash return.
The reason the calculator also shows the cap rate is that comparing it to the loan's cost tells you whether borrowing is helping. The right cost to compare against isn't your interest rate but your loan constant — the annual loan payment as a share of the loan, which runs a bit higher than the note rate because each payment also repays principal. When the cap rate is above the loan constant you have positive leverage: borrowing lifts your return above the all-cash yield. When it's below, you have negative leverage, and financing drags your return down. (Separately, heavy closing or rehab costs can pull your cash-on-cash below the cap rate even when the financing itself is positive, since they enlarge the cash you invest.) In a high-rate market many deals only clear with a larger down payment, creative terms, or rent growth. When you're ready to structure seller financing or a wrap to improve the deal, the Flexi calculator picks up where this leaves off.