What is cash-on-cash return?

Cash-on-cash return is the annual cash flow from a rental property divided by the total cash you invested. It tells you what return you are getting on the actual cash you put into the deal — not on the loan amount or property value.

What is a good cash-on-cash return for rental property?

8-12% is considered good for buy-and-hold investors. 12%+ is excellent. 6-8% is acceptable in strong appreciation markets. Below 6% means you are speculating on appreciation rather than earning on cash flow.

How is cash-on-cash return different from ROI?

Cash-on-cash return only counts cash flow that hits your pocket. ROI includes equity buildup, appreciation, and tax benefits — but those are projections that can vary widely. Cash-on-cash is the more honest, comparable metric.

How do I calculate cash invested?

Total cash invested = down payment + closing costs + initial repairs/make-ready costs. Do not count borrowed money — only your actual out-of-pocket cash.

Should I include vacancy and maintenance reserves?

Yes. A typical 5% vacancy reserve and 5% maintenance reserve gives you a realistic cash-on-cash return. Skipping these makes your numbers look better than reality and leads to bad investment decisions.

Cash-on-Cash Return Calculator for Real Estate Investors

Cash-on-Cash Return Calculator

Cash-on-Cash Return is the most honest metric in real estate investing. It tells you what return you are getting on the actual cash you put into a deal — not on the loan amount, not on the property value, but on YOUR cash.

The formula is simple: Annual Cash Flow ÷ Total Cash Invested = Cash-on-Cash Return %. A 12% cash-on-cash return means for every $100,000 you put down, you get $12,000 back in cash flow per year.

Calculate Your Cash-on-Cash Return

Cash Investment

Down Payment

Closing Costs

Initial Repairs / Make-Ready

Monthly Income

Monthly Rent

Monthly Expenses

Mortgage Payment (P&I)

Property Tax (monthly)

Insurance (monthly)

Property Management (monthly)

HOA / Other (monthly)

Maintenance Reserve (monthly)

Vacancy Reserve (monthly)

What Is a Good Cash-on-Cash Return?

Cash-on-Cash Return	Rating	What It Means
12%+	Excellent	Top-tier deal. Beats most stock market returns. Worth scaling into multiple units.
8-12%	Good	Solid investor return. Standard target for buy-and-hold investors.
6-8%	Acceptable	Below average but workable in appreciating markets where equity growth makes up for it.
0-6%	Marginal	You are betting on appreciation. Cash flow alone does not justify the investment.
Negative	Avoid	You are losing money monthly. Either restructure the deal or walk away.

Cash-on-Cash vs Other Return Metrics

Cash-on-Cash Return measures the return on cash you actually invested. It only counts the cash flow that hits your pocket.

ROI (Return on Investment) includes equity buildup, appreciation, and tax benefits — but it is harder to compare deals because those are projections.

Cap Rate measures the return on the property purchase price (not your cash). Used to compare property values, not investor returns.

Use Cash-on-Cash for: Comparing actual deals you are considering. Gut-checking if a rental will actually pay you. Sizing up portfolio performance.

How to Increase Cash-on-Cash Return

Lower your down payment — DSCR loans with 20% down vs 25% down meaningfully improves cash-on-cash even if rate is slightly higher
Buy below market — buying a $200,000 property for $180,000 increases cash flow without changing rent
Increase rent — even $100/month additional rent over a year is $1,200 more annual cash flow
Reduce expenses — shop insurance, contest property tax assessment, self-manage when feasible
Cash-out refinance — pulling equity to deploy in next deal can stack cash-on-cash returns

Get a DSCR Loan to Lock in Your Return

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