Cash-on-Cash Return Calculator
Last updated: August 2026
Cap rate tells you what a property earns. Cash-on-cash tells you what your money earns. The formula is simple and both inputs are routinely miscalculated in the same optimistic direction — which is what the full calculator below is designed to prevent.
Quick calculation
If you already know your annual cash flow and what you put in, this is the whole formula.
The most common error is counting only the down payment as cash invested. Closing costs, make-ready work and the first leasing fee are all money you put in.
Cash-on-cash lookup chart
Cash invested across the top, annual cash flow down the side.
| Cash flow ↓ / Invested → | $25k | $40k | $55k | $70k | $90k | $120k | $160k | $200k |
|---|---|---|---|---|---|---|---|---|
| $1k | 4.0% | 2.5% | 1.8% | 1.4% | 1.1% | 0.8% | 0.6% | 0.5% |
| $2k | 8.0% | 5.0% | 3.6% | 2.9% | 2.2% | 1.7% | 1.3% | 1.0% |
| $3k | 12.0% | 7.5% | 5.5% | 4.3% | 3.3% | 2.5% | 1.9% | 1.5% |
| $4k | 16.0% | 10.0% | 7.3% | 5.7% | 4.4% | 3.3% | 2.5% | 2.0% |
| $6k | 24.0% | 15.0% | 10.9% | 8.6% | 6.7% | 5.0% | 3.8% | 3.0% |
| $8k | 32.0% | 20.0% | 14.5% | 11.4% | 8.9% | 6.7% | 5.0% | 4.0% |
| $12k | 48.0% | 30.0% | 21.8% | 17.1% | 13.3% | 10.0% | 7.5% | 6.0% |
| $18k | 72.0% | 45.0% | 32.7% | 25.7% | 20.0% | 15.0% | 11.3% | 9.0% |
Full calculator
Builds both sides properly, and includes the line most calculators leave out — a capital expenditure reserve. A roof and a furnace are certainties rather than risks, and subtracting for them frequently turns a modest positive return negative.
- Loan amount
- $123,750
- Down payment
- $41,250
- Total cash invested
- $52,025
- Net operating income
- $12,540
- Monthly payment
- $865
- Annual debt service
- −$10,383
- Cash flow before reserves
- $2,157
- Capital reserve
- −$2,400
- Cash flow after reserves
- −$243
| Down | Loan | Cash invested | Annual cash flow | Cash-on-cash |
|---|---|---|---|---|
| 15% | $140,250 | $35,525 | −$1,628 | -4.6% |
| 20% | $132,000 | $43,775 | −$936 | -2.1% |
| 25% | $123,750 | $52,025 | −$243 | -0.5% |
| 30% | $115,500 | $60,275 | $449 | 0.7% |
| 40% | $99,000 | $76,775 | $1,833 | 2.4% |
| 100% | $0 | $175,775 | $10,140 | 5.8% |
Notice the return rising as the down payment rises. That is the signature of negative leverage, and it is the opposite of what most investing advice assumes.
Cash-on-cash counts only cash flow against cash invested. Principal paydown, appreciation and tax treatment sit outside it and are usually the larger part of a long-term return.
What counts as cash invested
| Include | Exclude |
|---|---|
| Down payment | The loan amount |
| Closing costs | Future capital expenditure |
| Loan points and fees | Anything financed into the loan |
| Inspection and appraisal | Your own labour, usually |
| Make-ready and initial repairs | |
| Funded reserves | |
| First leasing fee |
Counting only the down payment is the most common error.On a $300,000 purchase at 25% down, cash invested is not $75,000 — it is $75,000 plus closing, plus points, plus make-ready, plus the leasing fee. Using the smaller number inflates the return by close to twenty percent.
Positive and negative leverage
The relationship that explains why the same property behaves differently for different buyers, and why the standard advice to minimise the down payment is conditional rather than a rule.
| When | Effect | What raises the return |
|---|---|---|
| Loan rate below the property yield | Positive leverage — each borrowed dollar earns more than it costs | Borrowing more |
| Loan rate above the property yield | Negative leverage — each borrowed dollar costs more than it earns | Putting more down |
The ladder inside the calculator above shows this directly: change the rate and watch the direction of the column reverse. At current borrowing costs, negative leverage is the ordinary condition, which means maximising leverage frequently makes the retained property worse rather than better.
What the number leaves out
Principal paydown. Every payment builds equity. Not cash, but real, and it accelerates as the loan ages.
Appreciation. Uncertain, excluded, and historically the largest component of long-run returns in most markets.
Tax treatment. Depreciation shelters income, and the after-tax return frequently exceeds the pre-tax figure. A conversation with an accountant rather than a line in a formula.
Rent growth. The calculation is a snapshot of year one, and year one is usually the worst year. A property at 2% in year one may be at 6% by year five if rents rise while the payment does not.
Total return combines all of it and is usually far higher. But cash-on-cash answers the question that determines whether you can hold the property at all: does it feed you, or do you feed it.