What is a good cash-on-cash return?

Many investors look for 6% to 10% or more, but in California low single digits are common because prices are high relative to rent. Investors there often weigh appreciation and principal paydown alongside the cash return.

Does cash-on-cash return include appreciation?

No. It counts only the cash the property pays you in a year. Appreciation, principal paydown and tax benefits are separate, which is why it is called a pre-tax cash measure.

How is cash-on-cash different from cap rate?

Cap rate ignores financing and compares NOI to the full price. Cash-on-cash includes the mortgage payment and compares cash flow to only the cash you invested, so leverage can push it above or below the cap rate.

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Cash-on-Cash Return Calculator

Cash-on-cash return answers a simple question: for every dollar you put into the deal, how much comes back each year in cash. Enter the purchase, the financing and the operating numbers to see it, along with the ratio a DSCR lender would look at.

Cash-on-cash return

1.29%

$2,743 a year in pre-tax cash flow on $212,500 invested.

Down payment88%
Closing costs7%
Rehab5%

Total cash invested: $212,500
Loan amount: $437,500
Monthly NOI: $3,213
Monthly principal and interest: $2,985
Monthly cash flow: $229
Annual pre-tax cash flow: $2,743
Cap rate: 6.17%
DSCR (rent ÷ PITIA): 1.29

Your cash-on-cash return is below the 6.17% cap rate, a sign the loan costs more than the property earns; more down or a lower rate would lift it.

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Estimates for illustration only, not a loan offer or a commitment to lend. Rates, taxes, insurance and program rules vary; our team will confirm exact figures for your situation.

How this calculator works.

Total cash invested is the down payment plus closing costs plus any rehab you pay for up front. That is the denominator, the money you actually have in the deal.

Annual pre-tax cash flow is collected rent minus operating expenses and the principal and interest payment, times twelve. Operating expenses here are vacancy, a management and maintenance allowance, property tax, insurance and HOA.

Dividing the two gives cash-on-cash return. The DSCR shown is gross rent divided by principal, interest, taxes, insurance and HOA, the way most DSCR lenders calculate it.

Cash-on-cash return = annual pre-tax cash flow ÷ (down payment + closing costs + rehab).

Common questions.

Turn the estimateinto real numbers.

Answer a few questions and our team will price your scenario with current rates and the right program.

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See if your property qualifies

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Is this a purchase or a refinance?

No SSN. No credit impact.