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Cash-on-Cash Return Calculator
What the cash you put in earns in year one, after the loan is paid. See cash flow, cash-on-cash return and whether borrowing lifts the return above an all-cash purchase.
Don't have it? Build it in the NOI Calculator.
Enter a price to see the loan amount.
Optional. Typically 2–4% of price.
Optional. Work funded at closing.
Return by down payment
Same price, NOI and loan terms at different equity levels. Your current down payment is highlighted.
| Down payment | Cash invested | Debt service | Cash flow | DSCR | Cash-on-cash |
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Cash-on-cash, plainly explained
What is cash-on-cash return?
Cash-on-cash return is the annual pre-tax cash flow a property produces, divided by the cash you actually put in. It answers the practical question: what does my money earn this year?
Cash-on-cash = (NOI − annual debt service) ÷ total cash invested
Example: a $2,000,000 property with $150,000 of NOI, a $1,500,000 loan at 6% over 30 years and $40,000 of closing costs. Debt service is $107,919, leaving $42,081 of cash flow on $540,000 invested, a 7.8% cash-on-cash return.
What counts as cash invested?
- Down payment (purchase price minus the loan)
- Closing costs: title, escrow, legal, lender origination and third-party reports
- Repairs or improvements made at or shortly after closing
- Reserves the lender requires you to fund at closing
Leave out costs that come back to you, such as prorated rents or security deposits transferred from the seller. Closing costs on commercial purchases typically run 2% to 4% of price; more when the loan is small or the property is complex.
What is a good cash-on-cash return?
There is no universal number. Stabilized, well-located properties with moderate leverage often return 5% to 8% in year one. Value-add deals target more because they carry more risk and work. Compare the figure to what the same cash would earn elsewhere, and remember it is a single-year snapshot: it ignores appreciation, loan paydown, tax benefits and the eventual sale.
How is cash-on-cash different from cap rate?
Cap rate is the unlevered return: NOI over price, the same for every buyer. Cash-on-cash is the levered return: it depends on how much you borrowed and on what terms.
Borrowing helps when the cap rate is higher than the loan constant (annual debt service as a percent of the loan). That is positive leverage: each borrowed dollar costs less than it earns, so cash-on-cash rises above the cap rate. When the loan constant is higher than the cap rate, leverage works against you and cash-on-cash falls below the all-cash return. This calculator shows which side of that line a deal sits on.
Does it include principal paydown or appreciation?
No. Cash-on-cash counts only the cash that lands in your account. Principal paydown builds equity but is not cash, so it is shown separately here as a year-one figure. Appreciation, depreciation deductions and sale proceeds belong in a total-return or IRR analysis, not in cash-on-cash.
How does the loan change the return?
- More leverage (smaller down payment) raises cash-on-cash when leverage is positive and lowers it when negative. The scenario table shows the return at several down payments, including all cash.
- Higher rates raise the loan constant and shrink cash flow.
- Longer amortization lowers the payment and lifts cash-on-cash, at the cost of slower equity build-up.
- Interest-only periods produce the highest cash-on-cash but no principal paydown, and the payment jumps when amortization begins.
Is cash-on-cash before or after taxes?
Before tax, by convention. Depreciation often shelters much of the cash flow, so the after-tax figure can be higher than it looks, but that depends on your own tax position. Treat the result here as pre-tax and before any capital reserves beyond those already in NOI.