Annual cash flow divided by what you put in: down payment, closing costs, upfront repairs.
Leverage-sensitive, recheck it often.
Cash-on-cash return equals annual pre-tax cash flow divided by total cash invested: on $5,000 of annual cash flow against $95,000 invested, this site's calculator returns a 5.3% cash-on-cash return. Total cash invested means the down payment, closing costs and any upfront repairs, not the full purchase price, which is what separates this metric from cap rate. Because the denominator is only the cash you actually wrote a check for, cash-on-cash return captures the effect of leverage: a smaller down payment on the same deal produces a higher cash-on-cash percentage, even though the property itself has not changed.
Cash-on-cash moves with your financing. Cap rate does not. Run both side by side before comparing two different deals.
Cash-on-cash is annual cash flow divided by the total cash you invested: down payment, closing costs and any upfront repairs. Unlike cap rate, it includes the effect of your loan. That distinction matters. It answers a different question: not what the building yields in the abstract, but what return the specific dollars you wrote a check for are actually earning.
Because the denominator is your down payment, not the full price, leverage amplifies the percentage. A property at 25% down earning modest cash flow can still show a solid cash-on-cash. The payback figure tells you how many years of cash flow it takes to recoup your capital, which is one useful sanity check on how long you are committing the money before it comes back to you. If you still need the loan payment or a DSCR figure before you can fill in the cash flow field above, the investor loan calculator works both out from a price, rate and term.
This calculator loads with $5,000 in annual cash flow against $95,000 invested. Holding that cash flow fixed and only changing how much cash goes in shows leverage doing its work in isolation.
| Cash invested | Cash-on-cash return |
|---|---|
| $75,000 | 6.67% |
| $85,000 | 5.88% |
| $95,000 (this calculator's default) | 5.26% |
| $105,000 | 4.76% |
| $115,000 | 4.35% |
Nothing about the property changed across these five rows, only how much of your own cash it took to close. That is the entire argument for tracking cash-on-cash alongside cap rate instead of by itself.
Annual pre-tax cash flow divided by the total cash you put into the deal: down payment, closing costs and any initial repair costs.
Cap rate strips out financing and measures the property's all-cash yield. Cash-on-cash is a leveraged metric: it includes your loan, so two buyers with different mortgages on the same property will see different cash-on-cash returns.
Many residential investors target 8 percent or better as a baseline, but the right number depends on your local market, alternative investment options and how much of the return comes from appreciation versus cash flow.
No. It is a planning estimate. Run it alongside local market data and consult a licensed professional before committing capital.