Cash on Cash Return Calculator (rental property)

Understanding the cash-on-cash return calculator — concept and principle

This calculator measures the yearly pre-tax cash return on the cash you put into a rental property. From the price, down payment, closing costs, mortgage terms, rent, vacancy and operating costs, it gives the cash-on-cash return, annual and monthly cash flow, total cash invested, net operating income (NOI), mortgage payments, cap rate and debt service coverage ratio. Use it to screen and compare rental investments.

After costs and the mortgage, $3,574 a year is left on $84,000 of cash invested: 4.25%.

How it is calculated

NOI = rent × 12 × (1 − vacancy) − operating costs × 12.
Mortgage payments = 12 × P × r ÷ (1 − (1 + r)^−n), with loan P = price − down payment, monthly rate r and n months.
Pre-tax cash flow = NOI − mortgage payments.
Cash invested = down payment + closing and repair costs.
Cash-on-cash return = pre-tax cash flow ÷ cash invested.
Cap rate = NOI ÷ price; DSCR = NOI ÷ mortgage payments.

The principle

Cash-on-cash return answers a simple question: for each unit of cash I put in, how much cash comes back this year? It includes the effect of financing, unlike the cap rate, which describes the property alone. Borrowing can raise or lower the return: if the property's yield (cap rate) is above the mortgage cost, leverage helps; if it is below, leverage hurts. DSCR shows how comfortably the rent covers the loan; lenders often look for values above about 1.2 to 1.25.

Worked example

Default inputs: price $300,000, 25% down, $9,000 closing and repairs, 6.5% for 30 years, rent $2,600/month, vacancy 5%, operating costs $750/month.

NOI = 2,600 × 12 × 0.95 − 750 × 12 = 29,640 − 9,000 = $20,640.
Loan = $225,000; payments ≈ $1,422.15 a month, $17,065.84 a year.
Cash flow = 20,640 − 17,065.84 = $3,574.16 a year, about $297.85 a month.
Cash invested = 75,000 + 9,000 = $84,000.
Cash-on-cash = 3,574.16 ÷ 84,000 ≈ 4.25%; cap rate 6.88%; DSCR ≈ 1.21.

Each point is the calculator re-run with only “Purchase price” changed; the gold point is the default example. Change the inputs above and this chart follows your numbers.

Purchase price	Cash-on-cash return
75,000	59%
150,000	26.04%
225,000	12.02%
300,000	4.25%
375,000	-0.67%
450,000	-4.08%
600,000	-8.49%

How to read the result

Where does your result fall?

Compare cash-on-cash with what your cash could earn elsewhere at similar risk. Here the cap rate (6.88%) is only slightly above the mortgage rate, so leverage adds little and the cash return is modest. A DSCR near 1.2 leaves a thin cushion if rent drops or costs rise. The figure ignores appreciation, principal repaid and taxes, which also affect total return.

Common mistakes

Leaving out vacancy, repairs, management or insurance.
Using the cap rate as the return on your cash.
Forgetting closing costs in cash invested.
Treating principal repayment as a cost rather than part of equity build-up.

Keep in mind: Real rents, costs and financing terms vary, and local rules may limit rent increases. Treat this as a screening estimate. This is not financial or investment advice.

Frequently asked questions

What is a good cash-on-cash return?

It depends on the market and risk; investors often compare it with returns on other assets and their financing cost.

What is the difference between cap rate and cash-on-cash return?

Cap rate ignores financing; cash-on-cash uses the cash you actually invested after the loan.

What does a DSCR of 1.21 mean?

Net operating income is 1.21 times the mortgage payments.

Sources: D. Geltner, N. Miller, J. Clayton and P. Eichholtz, Commercial Real Estate Analysis and Investments, 3rd ed. (OnCourse Learning, 2014)

Checked 9 Nov 2026. Before-tax cash flow, equity cash-on-cash yield, cap rate and debt service coverage: D. Geltner, N. Miller, J. Clayton and P. Eichholtz, “Commercial Real Estate Analysis and Investments”, 3rd ed. (OnCourse Learning, 2014).

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