Free tool
Cash-on-cash return calculator
Enter one year of pre-tax cash flow and the cash you put in. Get the cash-on-cash return, the monthly cash flow and the yield per $100,000 invested — no sign-up.
Updated
Inputs
NOI minus debt service and capital reserves, for one year. A loss is a negative number.
Down payment, closing costs and up-front capital work — the equity actually paid in.
Cash-on-cash return
6.00%
Monthly cash flow
$4,500
Cash flow per $100,000
$6,000
Equity invested
$900,000
For illustration, not advice. Cash-on-cash is one year's pre-tax cash flow over the cash invested. It ignores the sale, loan paydown, appreciation, taxes and the timing of cash — which IRR and the equity multiple capture.
The cash-on-cash formula
Cash-on-cash return is one year of pre-tax cash flow divided by the total cash invested. It answers a narrow question: what is the equity earning in cash, this year?
- Cash-on-cash return = annual pre-tax cash flow ÷ total cash invested
- Pre-tax cash flow = NOI − debt service − capital reserves
Total cash invested is the equity actually paid in — down payment, closing costs and up-front capital work — not the purchase price. That is the difference from a cap rate, which divides NOI by the property’s value and ignores the loan.
A worked example
The property earns $54,000 of pre-tax cash flow in the year, and the investors put in $900,000. The cash-on-cash return is $54,000 ÷ $900,000 = 6.00% — $4,500 of cash flow each month, or $6,000 of cash flow a year for every $100,000 invested. Here is where those two figures come from:
| Line | Amount |
|---|---|
| Net operating income (6.5% cap rate on $3,000,000) | $195,000 |
| Interest-only debt service (6% × $2,250,000) | −$135,000 |
| Capital reserves | −$6,000 |
| Pre-tax cash flow | $54,000 |
| Down payment (25% of $3,000,000) | $750,000 |
| Closing costs | $60,000 |
| Up-front capital work | $90,000 |
| Total cash invested | $900,000 |
| Cash-on-cash return ($54,000 ÷ $900,000) | 6.00% |
What moves it
- Leverage. A loan shrinks the cash invested. If the property yields more than the debt costs, cash-on-cash rises; if it yields less, it falls. Check coverage with the DSCR calculator and the loan-to-value you are borrowing at.
- Interest-only periods. Lower payments lift cash flow while they last; the return drops when amortization starts.
- Capital calls and renovations. More equity in, or cash spent on units, lowers the return in the year it happens.
What it leaves out
Cash-on-cash ignores the sale, loan paydown, appreciation and taxes, and treats a dollar in year five like a dollar in year one. A deal can show a modest yield and a strong exit, or the reverse. Read it next to the whole-hold numbers in the IRR and equity multiple calculator, which shows cash-on-cash by year alongside IRR. In a syndication, the cash an LP receives also depends on the waterfall — try the preferred return calculator. In CREAssets, distributions run from the waterfall in your operating agreement and post to each investor’s capital account; see waterfalls and distributions.
Related calculators
- Real estate waterfall calculator
Return of capital, compounding pref, GP catch-up and two promote tiers — LP and GP splits instantly.
- Waterfall model in Excel (free download)
A three-tier IRR-hurdle waterfall with live formulas — pref, two promote tiers, LP and GP IRR by year. No sign-up.
- Preferred return calculator
Simple vs compounding, cumulative vs non-cumulative, with yearly distributions — pref accrued, paid and still owed.
- IRR and equity multiple calculator
Enter equity, yearly cash flows and sale proceeds — get IRR, equity multiple, cash-on-cash by year and average annual return.
Cash-on-cash return questions
How do you calculate cash-on-cash return?
Divide one year of pre-tax cash flow by the total cash invested. $54,000 of cash flow on $900,000 invested is a 6.00% cash-on-cash return.
What counts as total cash invested?
The equity actually paid in: down payment, closing costs, loan fees and up-front capital work paid in cash. Do not include the loan. If investors fund a capital call later, the cash invested goes up.
Is cash-on-cash the same as cap rate?
No. A cap rate is NOI over the property’s value and ignores the loan. Cash-on-cash is cash flow after debt service over the equity invested, so leverage changes it — up when the property yields more than the debt costs, down when it yields less.
Is cash-on-cash the same as ROI or IRR?
No. Cash-on-cash is one year’s cash yield. It ignores the sale, loan paydown and appreciation, and the timing of cash. IRR and the equity multiple measure the whole hold.
What is a good cash-on-cash return?
It depends on the strategy. A value-add deal may show little cash flow early and more after renovation; a stabilized property may yield more from year one with less upside. Compare it with the deal’s stated assumptions and with deals of similar risk.
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