Cash-on-Cash Return Calculator
The single most useful metric in rental investing: what return are you actually earning on the cash you put in?
What cash-on-cash return measures
Cash-on-cash return (CoC) tells you what percentage return you're earning each year on the actual dollars you put into the deal — your down payment, closing costs, and initial rehab. It ignores appreciation, loan paydown, and tax benefits to give you a clean, comparable number.
This is the metric that lets you compare a rental property to a stock portfolio, a savings account, or another rental in a different city. It's the closest thing real estate has to a "yield."
You buy a duplex with $50,000 down, $6,000 in closing costs, and $4,000 in initial repairs. After all expenses including mortgage, the property cash flows $425/month.
That 8.5% is what your money is earning before counting appreciation, loan paydown, or tax shelter. Add those in and total return often hits 15–20%.
What's a "good" cash-on-cash return?
- Below 4% — worse than a high-yield savings account. Not a deal.
- 4–7% — marginal. You're earning roughly what bonds or index funds do, with more work and risk.
- 8–11% — solid. This is where most experienced rental investors target their deals.
- 12%+ — excellent, often the result of buying below market, value-add, or great financing.
- 20%+ — usually means BRRRR, low down payment, or unrealistic expense assumptions.
The "right" target depends on your alternatives. In a 5%-treasury world, even 8% rentals need to justify their complexity. In a 1%-treasury world, 6% rentals were a great deal.
Why cash-on-cash isn't the whole story
CoC ignores three big sources of return:
- Loan paydown — your tenant pays down your principal every month, building equity invisibly.
- Appreciation — 3% average annual price growth on a $300K property is $9K/year of equity gain.
- Tax shelter — depreciation often makes rental income tax-free on paper.
An 8% CoC rental can easily be a 15-20% total annual return when you factor in everything. But CoC remains the cleanest measure because all three of those other returns are unrealized — you only see them when you sell or refinance.
Frequently asked questions
Does CoC include the mortgage payment?
Yes. Cash flow is net of all expenses, including the principal and interest portions of your mortgage. The interest is an expense; the principal is technically forced savings, but for CoC purposes both come out of cash flow.
What about my time?
CoC doesn't account for time. A 10% return on a turnkey rental requiring 2 hours/year is much better than a 10% return on a fix-and-flip eating your weekends. Bake your hourly value into your target return.
Does CoC change over time?
Yes — your CoC typically rises year over year because rents grow faster than fixed expenses (mortgage stays the same, taxes/insurance creep up slower than rent). A property at 8% CoC today might be 12% CoC in five years.
How does CoC compare to cap rate?
Cap rate ignores financing. Cash-on-cash includes it. On an all-cash purchase they're nearly identical. With a mortgage, CoC is typically higher than cap rate because leverage amplifies your return on the actual cash invested — as long as the cap rate exceeds your interest rate.
Calculations are estimates. Actual returns depend on accurate rent, expense, and vacancy assumptions. CoC ignores taxes, appreciation, and loan paydown.