What's a good cash-on-cash return?

8%+ is the common 'good deal' threshold. 10-12% is strong. 15%+ usually means high leverage or risky markets. Factor in whether your target includes appreciation — most investors target 8-10% cash-on-cash plus expected 3-5% appreciation.

How is cash-on-cash different from cap rate?

Cap rate measures the property-only return. Cash-on-cash factors in your mortgage and measures return on the actual cash you invested (down payment + closing + rehab). The leverage of a mortgage typically doubles or triples cash-on-cash versus cap rate.

Should I include appreciation in this?

No — cash-on-cash is just annual cash flow / cash invested. Appreciation is a separate (and speculative) return. Your total return is cash-on-cash + appreciation + principal paydown + tax benefits. Each is a distinct component worth tracking separately.

How do I improve cash-on-cash return?

Three levers: (1) lower purchase price (negotiate or buy in down markets), (2) raise rents (improvements, better management), (3) reduce expenses (insurance shopping, protest property tax, DIY maintenance). Refinancing at a lower rate also helps, but cash-out reduces equity.

What's a 'good' break-even month?

Most rental investors aim for break-even by month 12-24 (recouping closing costs + initial vacancy through positive cash flow). Faster break-even (under 12 months) is excellent. Slower (3+ years) means you've over-invested in the property or rent is too low — concerning. The break-even month tells you when total cash flow received equals total cash invested — at that point everything after is pure return on the appreciation/principal-paydown benefits.

Should I lever up for higher cash-on-cash?

Maybe, but it adds risk. Going from 25% down to 15% down (FHA-style or DSCR loans for investors) can boost cash-on-cash from 8% to 14% — but you've also: (1) less equity cushion if values drop, (2) higher monthly P&I → less margin if rents fall or vacancy rises, (3) typically higher interest rate (DSCR / non-QM). Conservative investors stay 25-30% down. Aggressive ones push 15-20% on stabilized properties they're confident in. New investors should err conservative until they have 3+ years of operating experience.

Money & Finance · Free tool

Cash-on-Cash Return Calculator

Annual cash flow / total cash invested. Factors down payment, closing, rehab, mortgage payment. Break-even month included.

Updated June 2026

Purchase priceDown payment (%)Closing costsRehab costsMonthly rentMonthly expenses (tax + ins + maint + HOA + PM)Loan rate (%)Loan term (years)

Cash-on-cash return

3.53%

Tier: below average

Annual cash flow

$3,036.83

Monthly cash flow

$253.07

Mortgage payment $1,496.93/mo

Break-even month

Month 340

Cash invested $86,000.00

8%+ is the common “good deal” threshold for long-term rentals. Mortgage uses a standard amortization formula.

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What it does

Calculate cash-on-cash return — annual pre-tax cash flow divided by total cash invested. Inputs: cash actually put in (down payment + closing costs + immediate rehab), monthly rent, operating expenses, mortgage payment (P&I). Output: annual cash flow, cash-on-cash percentage, break-even month, and tier label. The metric investors care about most when financing — it tells you what your cash actually earns each year, separately from appreciation and principal paydown.

Why cash-on-cash beats cap rate when comparing leveraged investments: leverage amplifies returns. A property with 6% cap rate financed at 70% LTV with 7% interest might still yield 10-12% cash-on-cash because each $1 of your equity is supporting $3.30 of property income. The reverse: a high-cap-rate distressed property might have NEGATIVE cash-on-cash if mortgage P&I exceeds NOI — the “great deal” you bought is actually losing money each month.

Target ranges: under 5%: marginal — likely betting on appreciation.5-8%: average. 8-12%: strong, the typical investor target. 12-15%: excellent, rare in stabilized markets.15%+: signals high leverage (75%+ LTV), distressed property, or short-term-rental optimization (very different risk profile). Most experienced investors target 8-10% cash-on-cash for stabilized rentals; lower thresholds (5-7%) if appreciation potential is high; higher thresholds (10-15%) for value-add or BRRRR strategies that justify the additional active work.

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How to use it

Enter total cash invested: down payment + closing costs (2-5% of price) + immediate rehab + reserves.
Enter loan terms: amount, rate, term (typically 30-year fixed for residential rental).
Enter expected monthly rent.
Enter operating expenses: tax, insurance, maintenance reserve, vacancy, property management.
Read annual cash flow (rent − OPEX − P&I × 12), cash-on-cash %, and break-even month.
Test sensitivity: rerun with -10% rent, +10% expenses, +1% interest rate to see worst-case scenarios.

When to use this tool

Buy decisions where you're financing — cash-on-cash captures the actual return on YOUR money, not the property as a whole.
Comparing different financing structures — 20% down vs 25% down on the same property gives different cash-on-cash; calculator shows by how much.
Portfolio analysis — knowing your aggregate cash-on-cash across properties tells you what your real-estate equity earns annually.
Refinance decisions — if pulling cash out via refi raises cash-on-cash %, may make sense.

When not to use it

Cash purchases — for all-cash deals, cap rate IS your cash-on-cash; no need to separate the metrics.
Total return analysis — cash-on-cash ignores appreciation, principal paydown, and tax benefits; for full picture, calculate IRR over a holding period.
Short-term flips — cash-on-cash assumes ongoing operation; for flip analysis, use ROI on cash invested vs profit at sale.
Investments where cash flow is negative by design (luxury appreciation plays) — cash-on-cash will be negative or zero; not a meaningful metric.

Common use cases

Educational use — demonstrating the underlying concept
Onboarding a colleague who needs the same calculation/conversion
Verifying a number or output before passing it on
Quick calculation during a typical workday

Frequently asked questions

What's a good cash-on-cash return?: 8%+ is the common 'good deal' threshold. 10-12% is strong. 15%+ usually means high leverage or risky markets. Factor in whether your target includes appreciation — most investors target 8-10% cash-on-cash plus expected 3-5% appreciation.
How is cash-on-cash different from cap rate?: Cap rate measures the property-only return. Cash-on-cash factors in your mortgage and measures return on the actual cash you invested (down payment + closing + rehab). The leverage of a mortgage typically doubles or triples cash-on-cash versus cap rate.
Should I include appreciation in this?: No — cash-on-cash is just annual cash flow / cash invested. Appreciation is a separate (and speculative) return. Your total return is cash-on-cash + appreciation + principal paydown + tax benefits. Each is a distinct component worth tracking separately.
How do I improve cash-on-cash return?: Three levers: (1) lower purchase price (negotiate or buy in down markets), (2) raise rents (improvements, better management), (3) reduce expenses (insurance shopping, protest property tax, DIY maintenance). Refinancing at a lower rate also helps, but cash-out reduces equity.
What's a 'good' break-even month?: Most rental investors aim for break-even by month 12-24 (recouping closing costs + initial vacancy through positive cash flow). Faster break-even (under 12 months) is excellent. Slower (3+ years) means you've over-invested in the property or rent is too low — concerning. The break-even month tells you when total cash flow received equals total cash invested — at that point everything after is pure return on the appreciation/principal-paydown benefits.
Should I lever up for higher cash-on-cash?: Maybe, but it adds risk. Going from 25% down to 15% down (FHA-style or DSCR loans for investors) can boost cash-on-cash from 8% to 14% — but you've also: (1) less equity cushion if values drop, (2) higher monthly P&I → less margin if rents fall or vacancy rises, (3) typically higher interest rate (DSCR / non-QM). Conservative investors stay 25-30% down. Aggressive ones push 15-20% on stabilized properties they're confident in. New investors should err conservative until they have 3+ years of operating experience.

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