Cash-on-Cash Return Calculator
Calculate cash-on-cash return on leveraged rental property: annual cash flow ÷ cash invested. Standard real estate investor benchmark.
| NOI | — |
| Debt Service | — |
| CapEx Reserve | — |
| Annual Cash Flow | — |
| Cash-on-Cash Return % | — |
Cash-on-cash return measures annual cash flow against total cash invested in a leveraged rental property. Unlike cap rate (unlevered), this captures the financing benefit. Formula: (NOI - Debt Service - CapEx Reserves) ÷ Cash Invested. Standard benchmark: 8% minimum, 12%+ excellent. Source: BiggerPockets, NAR.
Calculating Cash Invested
Total cash invested = down payment + closing costs (2-4% of price) + immediate repair/rehab + first-year reserves. A $300k purchase with 25% down = $75k down + ~$8k closing + $5k repairs + $5k reserve = $93k cash. Use this denominator, not just down payment, for accurate yield calculation.
Why CapEx Reserves Matter
Most cash-on-cash calculators ignore CapEx — leading to inflated returns. Real-world: roof every 20 years ($8-15k), HVAC every 15 ($5-8k), water heater every 10 ($1-2k), turnover costs $2-5k per tenant. Underwriting at 10% of rent for CapEx + maintenance is realistic floor; 15-20% for older or rougher properties. Cash flow without CapEx reserve is fake cash flow.
Positive vs Negative Leverage
Positive leverage: cap rate > mortgage rate. Cash-on-cash exceeds cap rate. Negative leverage (common in 2024-26 with 6.5%+ rates): cap rate < mortgage rate. Cash-on-cash falls below cap rate or goes negative. In negative-leverage markets, all-cash or large down payment performs better. Always run both leveraged and unlevered scenarios before bidding.
Last updated May 2026. Sources: BiggerPockets — Cash-on-Cash, NAR Investment Report.