Cash-on-cash return calculator
What your own money earns in the first year, after the mortgage. The denominator is collected as separate components rather than one figure, because understating it is the usual way this number gets flattered.
The arithmetic, line by line
- This is a negative return: the property takes more cash each year than it produces.
What goes in the denominator
Total cash invested is every dollar that left your pocket to acquire the property: the down payment, closing costs, and whatever you spent making it rentable before the first tenant moved in. Leaving the last two out is what turns a 6% return into an 8% one on paper.
What this number does not include
Cash-on-cash is a single-year, pre-tax cash measure. It counts none of the principal your tenant pays down for you, no appreciation, and no tax treatment — not depreciation, not the interest deduction. A property can post a modest cash-on-cash return and still be the better long-term hold, and a high one says nothing about the years after the first.
How it differs from cap rate
Cap rate deliberately ignores the loan; cash-on-cash is mostly about the loan. The same building bought all-cash and bought with 75% leverage has one cap rate and two very different cash-on-cash returns. Use cap rate to compare properties and cash-on-cash to compare ways of buying one.
A negative result is a real result
If the property takes more cash each year than it produces, this calculator shows a negative percentage rather than a zero. That is not a rounding artefact or an input error — it is the deal, and it is worth seeing plainly.