Cash-on-Cash Return Calculator – Complete Guide for Real Estate Investors
The Cash-on-Cash Return Calculator on MyTimeCalculator is designed for real estate investors who want to evaluate income properties based on the cash they actually invest and the cash they actually receive each year. It focuses on pre-tax cash flow and ignores non-cash items like depreciation and paper appreciation, making it a practical metric for comparing deals and understanding your immediate yield on invested cash.
The simple tab gives you a quick cash-on-cash estimate from initial cash invested and annual cash flow. The advanced tab builds the same metric starting from purchase price, financing structure, operating income and expenses, and annual mortgage payments, giving you a clear view into how each component affects your returns.
1. What Is Cash-on-Cash Return?
Cash-on-cash return (CoC) measures the annual pre-tax cash flow generated by an investmentative to the amount of cash you invested upfront. The basic formula is:
This metric is especially popular in leveraged real estate because it focuses on the performance of your own cash, not the entire value. Two properties with the same price can have very different cash-on-cash returns depending on down payment, financing terms and operating performance.
2. Components of Initial Cash Invested
In real estate, initial cash invested is usually more than just the down payment. It typically includes:
- Down payment: Your equity contribution at closing.
- Closing costs: Lender fees, title, recording costs and other transaction fees.
- Renovation / CapEx: Upfront repairs, upgrades and capital expenditures needed to get the rent-ready or repositioned.
The advanced tab of the calculator adds these components together to obtain total cash invested, which forms the denominator of the cash-on-cash formula.
3. NOI, Debt Service and Annual Cash Flow
To arrive at the annual pre-tax cash flow, the calculator works through the income statement in three steps:
− Operating expenses (taxes, insurance, repairs, management, utilities, etc.)
= NOI (Net Operating Income)
NOI
− Annual mortgage payments (principal + interest)
= Annual pre-tax cash flow
The Cash-on-Cash Return Calculator uses this cash flow as the numerator in both the simple and advanced modes.
4. How to Use the Cash-on-Cash Return Calculator
- Choose the calculator mode: Simple Cash-on-Cash if you already know your total cash invested and annual cash flow, or Advanced Deal Analysis if you want the tool to derive these figures from the details.
- In simple mode, enter your initial cash invested and annual pre-tax cash flow. The tool will output the CoC percentage and an approximate payback period in years.
- In advanced mode, enter purchase price, down payment, closing and renovation costs, annual rental income, annual operating expenses and annual mortgage payments.
- Click the calculate button. The calculator will compute total cash invested, NOI, annual cash flow, CoC return and a debt service coverage ratio (DSCR).
- Use the deal snapshot table to see all key metrics at a glance and compare different scenarios by adjusting inputs like rent, expenses or financing terms.
5. Understanding DSCR and Risk
The debt service coverage ratio (DSCR) compares NOI to annual debt service:
A DSCR above 1.0 means the generates enough income to cover its debt obligations before tax and capital expenditures. Many lenders look for DSCR values of around 1.20–1.25 or higher as a sign that there is enough cushion to handle vacancies and unexpected expenses. A high cash-on-cash return with a very low DSCR may signal increased risk.
6. What Is a Good Cash-on-Cash Return?
There is no single “correct” cash-on-cash return because it depends on your market, risk tolerance and financing structure. Some investors in lower-risk markets may be satisfied with 6–8% CoC, especially if they expect strong appreciation. Others may target double-digit cash-on-cash returns for value-add or higher-risk deals.
The key is consistency: use the calculator to analyze potential acquisitions and compare them on a like-for-like basis with your existing portfolio or alternative investments such as bonds, REITs or other income-generating assets.
7. Cash-on-Cash vs Cap Rate, IRR and Total ROI
Cash-on-cash return is only one way to look at a deal. Other important metrics include:
- Cap rate: NOI divided by purchase price. Focuses on the’s incomeative to its value, ignoring financing.
- Internal rate of return (IRR): A time-weighted return measure that accounts for cash flows over multiple years and eventual sale value.
- Total ROI: Overall profit including appreciation, principal paydown and cash flow, divided by the total amount invested.
Cash-on-cash return is often the first filter for income-focused investors because it highlights how hard their cash is working in the near term, before layering on long-term growth and exit assumptions.
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Cash-on-Cash Return Calculator FAQs
Frequently Asked Questions
Quick answers to common questions cash-on-cash return, total cash invested, annual cash flow and how to use this calculator for real estate deals.
Cap rate is calculated as NOI divided by the’s purchase price (or market value) and does not take financing into account. Cash-on-cash return, by contrast, compares annual cash flow after debt service to the actual cash you invested. Two deals with the same cap rate can have very different cash-on-cash returns if the financing terms or down payment ratios are different.
In most real estate analyses, yes. Cash-on-cash return is meant to reflect the performance of your total cash committed to the deal. That usually includes down payment, closing costs and any renovation or capital expenditure required to get the ready for tenants. The advanced tab in this calculator adds all of these together to compute total cash invested.
Cash-on-cash return is traditionally calculated using pre-tax cash flow. Taxes depend on your personal situation, local regulations and how you structure the investment. Using pre-tax figures keeps the metric comparable across different deals and investors, while tax analysis can be layered on separately if needed.
Many income-focused investors aim for mid to high single-digit or double-digit cash-on-cash returns, depending on market and risk tolerance. For example, 8–12 percent CoC may be attractive in some markets, while in very stable core markets investors might accept lower CoC in exchange for stronger appreciation and lower risk. The calculator helps you compare deals against your own targets consistently.
If the’s cash flow is negative, the cash-on-cash return will also be negative, indicating that the deal is not currently covering its costs. In advanced mode, the DSCR will drop below 1.0 when NOI is not sufficient to pay the annual mortgage. These signals can be useful when stress testing deals or evaluating whether a is over-leveraged or too dependent on optimistic assumptions.
Yes. Although the advanced inputs are tuned for real estate, the simple cash-on-cash tab can be used for any investment where you know how much cash you invested and how much pre-tax cash flow you expect per year. Examples include certain private credit, business investments or income-focused alternative assets.