Cash-on-cash return measures how hard the actual cash you invested is working in a real-estate deal. Unlike cap rate, it is calculated after your mortgage payment and only on the money you personally put in — down payment, closing costs and renovations — so it captures the effect of leverage. Enter your annual pre-tax cash flow and total cash invested to see the return instantly.
How it works
The formula divides your annual pre-tax cash flow by the total cash invested, as a percentage:
cash-on-cash = (annual pre-tax cash flow ÷ total cash invested) × 100
Cash flow here is what is left after operating expenses and the mortgage payment. Cash invested is the real money out of your pocket — typically the down payment, closing costs and any rehab — not the financed loan amount. Because the denominator excludes borrowed money, a well-leveraged deal can show a much higher return than the property’s standalone yield.
Example
A rental that produces $8,000 of annual pre-tax cash flow, with $120,000 of cash invested:
(8,000 ÷ 120,000) × 100 = 6.67%
| Cash flow | Cash invested | Cash-on-cash |
|---|---|---|
| $8,000 | $120,000 | 6.67% |
| $12,000 | $120,000 | 10.0% |
| $8,000 | $80,000 | 10.0% |
So either earning more cash flow or investing less of your own cash raises the return. All calculations happen locally in your browser.