Cash on Cash Return Calculator
Calculate annual cash-on-cash return for a real estate investment.
How to Use the Cash on Cash Return Calculator
Enter annual pre-tax cash flow and the total cash invested in the property. The calculator divides cash flow by cash invested to estimate the annual cash-on-cash return.
Practical Example
If a property produces USD 12,000 of annual pre-tax cash flow and requires USD 120,000 of cash investment, the cash-on-cash return is 10%.
Factors That Affect the Result
Financing terms, vacancy, rent, operating expenses, repairs, taxes and the amount of initial cash invested can materially change the return.
Frequently Asked Questions
What is the formula?
Cash on Cash Return = Annual Pre-Tax Cash Flow ÷ Total Cash Invested × 100.
Does it include property appreciation?
No. It focuses on annual cash income relative to invested cash.
Is it the same as cap rate?
No. Cap rate ignores financing, while cash-on-cash return reflects the investor’s actual cash invested.
Cash-on-Cash Return vs. Property ROI
Cash-on-cash return compares annual pre-tax cash flow with actual cash invested, making financing relevant to the result. It differs from total ROI because it generally excludes unrealized appreciation and principal paydown. Vacancy, repairs, financing costs and reserves should be estimated consistently.
Cash-on-Cash Return Interpretation
Cash-on-cash return compares annual pre-tax cash flow with actual cash invested, making financing relevant to the result. It differs from total ROI because it generally excludes unrealized appreciation and principal paydown. Vacancy, repairs, financing costs and reserves should be estimated consistently.
Methodology and Practical Limits
Cash-on-cash return compares annual pre-tax cash flow with actual cash invested. Financing terms can materially change the result, and the metric excludes unrealized appreciation unless it is explicitly included in the chosen cash-flow definition.