Cap Rate vs Cash-on-Cash Return Comparison Calculator 2027

Compare cap rate (unleveraged) vs cash-on-cash return (leveraged) for investment property 2027 — see when financing boosts return, when it drags.

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Cap Rate Definition

NOI / Purchase Price. Measures property return IF you bought all cash. Ignores financing. Pure asset quality + market metric. Standard for commercial valuation.

Cash-on-Cash Definition

Annual Cash Flow / Total Cash Invested (down + closing + reserves). Measures return on YOUR cash specifically. Leverage amplifies CoC up OR down.

Positive vs Negative Leverage

Positive: Cap Rate > Mortgage Rate. Borrowing AMPLIFIES return because property earns more than debt costs. Negative: Cap Rate < Mortgage Rate. Borrowing REDUCES return — earning less than paying debt service.

When to Use Each

Cap Rate: comparing properties, valuation, no-leverage scenarios, commercial deals. CoC: investor decisions, personal ROI, comparing real estate to other investments (stocks, bonds).

Source: biggerpockets.com investment analysis, nar.realtor commercial guides. Last updated: May 2026.