Cash on Cash Return Calculator

Last reviewed April 2026

If you're using a mortgage to buy a rental property, Cash on Cash Return is the most important number on the page. Forget cap rate for a minute. Cash on Cash tells you what percentage of the actual cash you put into the deal you're getting back every year in pre-tax cash flow. That's the yield on your money, and it's what determines whether you should keep buying rentals or just put the money in a CD.

The Formula

Cash on Cash Return is annual pre-tax cash flow divided by total cash invested. Total cash invested includes your down payment, closing costs, and any initial improvements you have to make to get the property rent-ready. Annual pre-tax cash flow is everything left over after operating expenses and mortgage payments.

Here's an example. You buy a $200,000 single-family rental with 20% down ($40,000) and $5,000 in closing costs. Initial improvements are another $5,000 to get it rent-ready. Total cash in the deal: $50,000. The property rents for $1,800 a month, or $21,600 a year. After operating expenses of $9,216 and a mortgage payment based on the current 6.37% rate, your annual pre-tax cash flow comes out small but positive in this scenario. Cash on Cash Return is that cash flow divided by your $50,000 invested. That number is what you compare against alternatives.

What's a Good Cash on Cash Return?

The honest answer is "it depends on what else your money could be doing." When mortgage rates were 3 percent, a 6 percent Cash on Cash Return looked amazing because there was nothing else paying that. Today, with high-yield savings paying 4 to 5 percent and Treasury bills paying similar, a 6 percent Cash on Cash Return on a leveraged rental is barely worth the trouble. I want at least an 8 to 10 percent Cash on Cash Return in today's environment, and I want to see the path to it climbing as rents rise over the next 3 to 5 years.

What Cash on Cash Doesn't Tell You

Cash on Cash Return only measures pre-tax cash flow yield. It doesn't capture appreciation, principal paydown, or tax benefits like depreciation. Those are real returns and they can be significant, especially in good markets. That's why LandlordCalc also shows you a 5-year ROI projection that layers in appreciation and equity buildup. Cash on Cash is the cleanest year-one metric, but it's not the whole story.

How LandlordCalc Calculates It

You enter purchase price, down payment percentage, closing costs, initial improvements, monthly rent, expenses, and interest rate. LandlordCalc calculates the mortgage payment, deducts everything from gross income to get pre-tax cash flow, and divides by your total cash invested. The result shows up alongside cap rate, NOI, DSCR, GRM, and the rest so you can see how the deal stacks up across every metric, not just one.

Frequently Asked Questions

What is a good Cash on Cash Return for a rental property?

In today's interest rate environment I look for at least 8% to 10% on a single-family rental. With high-yield savings paying 4 to 5% with zero risk and zero work, anything below 8% on a leveraged rental is not worth the headache unless there's a strong appreciation story behind it.

How is Cash on Cash Return different from cap rate?

Cap rate ignores financing and measures the property's unlevered return. Cash on Cash Return factors in your mortgage and tells you the actual yield on the cash you put into the deal. For a leveraged purchase, Cash on Cash is the more relevant number.

Does Cash on Cash Return include appreciation?

No. Cash on Cash measures only pre-tax annual cash flow as a percentage of cash invested. It doesn't capture appreciation, principal paydown, or tax benefits. For a complete picture, look at Cash on Cash alongside the 5-year ROI projection.

What counts as 'cash invested' in Cash on Cash Return?

Down payment, closing costs, and any initial improvements or rehab needed to get the property rent-ready. Anything you spent out of pocket to acquire and stabilize the property counts. Future cash you'll spend on CapEx down the road does not.

Can Cash on Cash Return be negative?

Yes. If your operating expenses plus mortgage payment exceed your gross rental income, you have negative cash flow and a negative Cash on Cash Return. That means you're feeding the property out of your own pocket every month, which is a red flag in most cases.