Cash-on-Cash Return Formula
\(\text{Net Annual Cash Flow} = \text{Annual NOI} - \text{Annual Debt Service}\) \(\text{Cash-on-Cash Return \%} = \frac{\text{Net Annual Cash Flow}}{\text{Total Initial Cash Invested}} \times 100\)
Leveraged Cash-on-Cash Return Table ($95,000 Out-of-Pocket Cash Invested)
| Annual NOI | Annual Mortgage Debt Service | Net Annual Pre-Tax Cash Flow | Cash-on-Cash Return % |
|---|---|---|---|
| $28,000 | $21,600 | $6,400.00 | 6.74% CoC Return |
| $31,500 | $21,600 | $9,900.00 | 10.42% CoC Return |
| $35,000 | $21,600 | $13,400.00 | 14.11% CoC Return |
How to Use This Cash-on-Cash Return Calculator
- Select your preferred account currency from the header picker.
- Enter total out-of-pocket cash invested (down payment + closing costs + rehab).
- Input annual Net Operating Income (NOI).
- Enter annual mortgage payment (P&I debt service).
- View net annual pre-tax cash flow and Cash-on-Cash Return %.
Frequently Asked Questions
What is Cash-on-Cash Return in real estate?
Cash-on-cash return measures the annual pre-tax cash flow received divided by the total cash invested out of pocket, evaluating leveraged performance.
What is a good Cash-on-Cash return percentage?
Most real estate investors target a Cash-on-Cash return of 8% to 12%+, which significantly outperforms typical stock dividend yields.
What items count toward total out-of-pocket cash invested?
Total cash invested includes down payment, closing costs, upfront rehabilitation/renovation costs, and loan origination fees.
How does leverage increase Cash-on-Cash return?
Using mortgage debt reduces the initial cash required out of pocket. If property income is strong, leverage amplifies the percentage return earned on your cash.
Can Cash-on-Cash return be negative?
Yes! If annual mortgage debt service exceeds Net Operating Income (NOI), net cash flow becomes negative, requiring cash infusions to cover monthly shortfalls.
What is the difference between ROI and Cash-on-Cash return?
Total ROI includes property equity appreciation, loan principal reduction, and tax benefits. Cash-on-Cash return strictly measures spendable liquid cash flow.
Is my personal financial data saved on any server?
No. All calculations run locally inside your web browser. History and saved presets are stored strictly in your browser’s local storage.