Cash-on-Cash Calculator
Annual pre-tax cash flow divided by the actual cash you put in — down payment, closing costs, rehab. The leveraged investor's headline number, with its blind spots named.
The leveraged investor's headline — and its blind spot
Cash-on-cash asks the narrow question a leveraged buyer feels most: my actual cash in the door versus the cash the property hands back each year. It ignores equity growth and appreciation entirely, which makes it both a sharp cash-flow gauge and a number perfectly capable of flattering a deal that builds nothing.
Cash-on-cash = annual pre-tax cash flow ÷ total cash invested (down + closing + rehab)
Example: $50,000 down, $5,000 closing, $10,000 initial rehab — $65,000 in. Cash flow of $6,500 a year after every cost including the mortgage: cash-on-cash = 10%, and the rent alone returns your stake in about a decade. The same property's cap rate might be 5.5% — leverage is the whole difference between the two figures.
Pair it or be fooled by it
Read cash-on-cash beside the cap rate (unleveraged truth) and the cash-flow forecast's fragility: a return built on 90% leverage can be spectacular in the spreadsheet year and negative in the year of a roof, a vacancy and a rate reset arriving together.
How this is calculated
Denominator = the three cash-in fields exactly as entered. Numerator = your annual pre-tax cash flow (rent minus every cost including debt service) — the rental property calculator computes it from a full deal if you do not have it yet. No equity or appreciation credit, by definition of the metric.
Frequently asked questions
What is a good cash-on-cash return?
Investor folklore wants 8–12% in many markets, but the meaningful comparison is against your alternatives at similar risk — and against the same property's cap rate, which shows how much of the figure is leverage rather than the asset.
Why 'pre-tax'?
Because depreciation shelters rental income differently per investor's situation; pre-tax is the only common denominator. Your after-tax figure is lower or — with paper losses — occasionally the tax tail wags in your favor; either way it is personal, not printed here.
Does cash-on-cash improve over time?
Usually, as rents rise against a fixed payment — one of leverage's genuine gifts. Re-running the page with grown rents (and grown expenses) shows the trajectory; year-one is the worst year by design in a healthy deal.
Should rehab really count as cash in?
Yes — money spent before the first rent check is invested capital by any honest definition. Excluding it is the oldest trick in flipper arithmetic.
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