Estimate for planning. Not financial or investment advice.
Cash-on-cash equals annual pre-tax cash flow divided by total cash invested (down payment, closing and upfront repairs).
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Cash-on-cash is annual cash flow divided by your total cash invested — down payment, closing costs and any upfront repairs. Unlike cap rate, it reflects your financing, so it answers the real question: what return is my invested cash earning?
Because you only invest the down payment, a modestly cash-flowing property can post a strong cash-on-cash return — the upside of leverage. The payback figure shows how many years of cash flow it takes to recoup your investment (before appreciation and loan paydown, which add more).
Annual cash flow divided by the cash you invested.
Cap rate ignores financing; cash-on-cash includes your loan and down payment.
Many investors target 8%+; it varies by market.
No — it's an estimate.