Cash-on-cash Return Calculator
Quick answer
CoC = annual pre-tax cash after debt service ÷ total cash invested. Leverage lifts CoC when rent is stable—but the same loan amplifies pain when rent dips. If CoC looks great only because you left reserves out of the denominator, fix the denominator.
For a related estimate, see Rental Cash Flow Calculator.
Explore further: Airbnb Calculator · Brrrr Calculator
Formula
Cash-on-cash return ≈ (NOI − annual debt service) ÷ cash invested. NOI excludes financing; debt service includes P&I (and escrow if paid with the loan). Excluded: loan proceeds not yet deployed, paper returns, and principal paydown (equity accrual, not cash income).
Explore further: Price Per Square Foot Calculator
Cash-on-cash is pre-tax cash remaining after debt service, divided by cash you wired in—down payment, closing, rehab out of pocket, and real reserves if you count them as invested. Use it to compare two levered deals on the same footing; pair with cap rate so you see unlevered yield and levered equity yield together.
How to use this calculator
- Use one definition of “cash in”: Partners, earn-outs, and seller credits blur what you actually risk—align with what left your bank account.
- Label pre-tax clearly: Depreciation can make taxable income look better or worse than cash—CoC is a cash story unless you say otherwise.
- Recompute after refi: Cash-out increases equity in the denominator if proceeds sit in the account; if you redeploy, it is a different investment.
High CoC can hide skinny reserves
A 20% CoC that dies on one month of vacancy was never 20%—it was borrowed timing luck.
Real-world examples
- Case study: two exits: Deal A: $11,400 cash after debt on $76,000 in → ~15% CoC. Deal B: $15,000 on $125,000 → 12%—more dollars, lower percentage. If A needs heavy management and B is passive, the “lower” CoC may buy better sleep; if A is thin on capex, the headline is fake.
- Cash-out refi: You pull $40k cash but leave it in checking—denominator rises, cash flow unchanged → CoC falls even though operations did not improve. Decide whether that cash is still “in” the deal or funding something else.
What to decide
If CoC beats your cost of capital (including your best alternative use of that cash) with room for a vacancy quarter, leverage is doing its job. If it only works at peak rent, you are levered beta on a thin margin—stress DSCR and downside rent before you celebrate.
FAQ
What counts as cash invested?
Down payment, closing, rehab out of pocket, and any reserves you actually deploy—exclude hypothetical future draws unless you model them.
Why can cash-on-cash differ from cap rate?
Cap rate is unlevered (NOI ÷ price); cash-on-cash is after debt service divided by equity—leverage magnifies or crushes the percentage.
Pre-tax or after-tax?
Most back-of-napkin CoC is pre-tax; after-tax depends on depreciation, your bracket, and exit—label which you mean.
Is a high CoC always the goal?
Not if it comes from razor-thin reserves or fantasy rent—sustainable CoC beats a heroic number that breaks on the first vacancy.