Cash-on-Cash Return Calculator
Calculate Cash-on-Cash (CoC) return to evaluate how effectively your actual out-of-pocket cash invested in a rental property produces annual cash flow.
How to use the Cash-on-Cash Return Calculator
- 1Enter annual pre-tax cash flow (rental income minus mortgage, taxes, insurance, and maintenance).
- 2Enter total initial cash invested (down payment, closing costs, and upfront renovation costs).
How Cash on Cash is Calculated
Divide annual pre-tax net cash flow by total initial cash invested and multiply by 100.
Measures cash return on actual equity deployed rather than total purchase price.
- 1Cash-on-Cash Return = ($7,200 / $75,000) × 100 = 9.60%
- 2Payback Period = $75,000 / $7,200 = 10.4 years
What affects Cash on Cash results
- Financing leverage (higher loan percentage increases CoC return if rent exceeds debt service).
- Vacancy rates and unexpected capital expenditures (CapEx).
Frequently Asked Questions
What is a good Cash-on-Cash return on rental property?
Most real estate investors look for a Cash-on-Cash return of 8% to 12% or higher to compensate for real estate illiquidity and active management.
How does Cash-on-Cash Return differ from Cap Rate?
Cap Rate evaluates property yield assuming an all-cash purchase, while Cash-on-Cash Return measures the actual cash return on the specific cash equity you invested with mortgage leverage.
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