Enter rental income, expenses, debt service, and cash invested to calculate annual cash flow and cash-on-cash return.
How to Use the Cash on Cash Return Calculator
Fill in gross annual rental income, annual operating expenses, annual debt service, and total cash invested — down payment, closing costs, and any rehab spend combined. Every field updates the result immediately.
Where cap rate ignores the mortgage on purpose, cash-on-cash return is built entirely around it. It answers a narrower, more personal question than cap rate does: not "how well does this property perform," but "how hard is my actual cash working," once the lender's slice of the payment is subtracted out.
The Math
Annual Cash Flow = Gross Income − Operating Expenses − Debt Service
Cash-on-Cash Return = Annual Cash Flow ÷ Total Cash Invested × 100At the defaults — $36,000 in rent, $12,000 in expenses, $15,000 in mortgage payments, against $70,000 put down — annual cash flow is $9,000 and the return works out to roughly 12.9%.
Why This Number Moves With Leverage
Borrow more against the same property and total cash invested drops, so the same dollar of cash flow suddenly represents a bigger percentage return — even though the property itself hasn't gotten any more profitable. That's the whole point of the metric, and also its main trap: a smaller down payment can make a mediocre deal look excellent on this one number alone, while quietly raising how exposed the owner is if a vacancy or a rate reset hits the payment. Cash-on-cash tells you about the return on your capital specifically, not about the underlying asset — pair it with an unleveraged number like cap rate before deciding a deal is actually good.
One more thing worth flagging: debt service here means principal and interest together, the full mortgage payment, not just the interest portion. Leave out principal and the cash flow figure overstates what actually lands in the owner's pocket each year.