Cash-on-Cash Return Calculator

Cash-on-cash return answers the most important question a leveraged investor can ask: “How much am I earning on the money I actually put in?” The formula is CoC = Annual Cash Flow ÷ Total Cash Invested × 100. Cash invested includes your down payment, closing costs, and any upfront rehab.

Unlike cap rate, CoC accounts for your financing. A 6% cap rate property financed with a 7% mortgage may produce negative cash flow — a negative CoC return. The same property purchased with cash would show a 6% return. CoC tells you the leveraged outcome; cap rate tells you the property's underlying quality.

Using both together: if cap rate exceeds your mortgage rate, leverage amplifies your returns (positive arbitrage). If your mortgage rate exceeds the cap rate, you are paying more in interest than the property earns — negative leverage. In that scenario, you need rent growth or appreciation to justify the deal.

CoC ignores appreciation, principal paydown, and tax benefits. It is purely a current income metric. Sophisticated investors use it as a floor — if the CoC alone meets your threshold, appreciation and equity growth are upside, not a requirement to break even.