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Cash-on-cash return calculator.

Cap rate ignores your loan; cash-on-cash doesn’t. This measures the annual pre-tax cash flow you earn on the real cash you put into a deal — down payment, closing, and upfront capital.

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Cash-on-cash return
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Annual pre-tax cash flow
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Implied DSCR
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Cash-on-cash = annual pre-tax cash flow ÷ total cash invested. Cash flow is NOI minus debt service; cash invested is your down payment plus closing costs and any upfront capital. Leverage boosts cash-on-cash when the cap rate is above the loan rate — and drags it below the cap rate when it isn’t.

How cash-on-cash return works

Cash-on-cash return answers a question a cap rate can’t: what am I earning on the actual cash I put in? It divides your annual pre-tax cash flow — NOI minus debt service — by your total equity, including down payment, closing costs, and any upfront capital. Because it isolates the levered return on your own money, it is the number most buyers watch in year one.

Example. You buy a property producing $150,000 of NOI with a loan that costs $95,000 a year in debt service, leaving $55,000 of cash flow. If you invested $650,000 of cash to close, your cash-on-cash return is about 8.5%. Lower your down payment and the percentage often rises — as long as the cap rate stays above your loan rate.

Frequently asked questions

What is a good cash-on-cash return?
It depends on risk, hold, and market, but many commercial investors target roughly 6–12% cash-on-cash on stabilized deals, with value-add deals underwritten higher to compensate for execution risk. Compare it to your cap rate and loan rate rather than to a fixed benchmark.
What’s the difference between cash-on-cash and cap rate?
Cap rate = NOI ÷ price and ignores financing — it’s the unlevered yield. Cash-on-cash = cash flow after debt service ÷ cash invested — it’s the levered return on your actual equity. They only match on an all-cash purchase.
What counts as “cash invested”?
Your down payment plus closing costs, loan fees, and any upfront capital such as immediate repairs or tenant improvements you fund at acquisition — essentially every dollar of equity you bring to close and stabilize the deal.

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Estimates are for planning only and use simplified assumptions — not tax, legal, or investment advice. Verify with your lender, CPA, and a full broker analysis before acting.