Free tool and guide
Cash-on-cash return calculator what your cash earns in a year
Cash-on-cash return shows what your cash actually earns each year, after the loan is paid. Enter NOI, debt service and the cash you put in below.
Cash-on-cash return is annual pre-tax cash flow divided by the total cash invested. If a property produces $129,000 of cash flow after debt service and reserves, on $3,200,000 of cash invested, the cash-on-cash return is about 4%.
Cash-on-cash calculator
Enter NOI, debt service, reserves and the cash you invest to get annual cash flow and cash-on-cash return. It runs in your browser: your numbers are not uploaded, saved or tracked, and there is no sign-up.
Showing invented example numbers
- Cash-on-cash return
- 4.03%
- Annual cash flow divided by cash invested
- Annual cash flow
- $129,000
- Monthly cash flow
- $10,750
- Total cash invested
- $3,200,000
Arithmetic only, with no market benchmarks. This is not a loan quote or advice.
The cash-on-cash formula
Cash-on-cash = annual pre-tax cash flow / total cash invested. Cash flow is NOI less debt service and capital reserves. Cash invested includes the down payment, closing and loan costs, and any repairs paid upfront.
A worked example
$520,000 of NOI, less $379,000 of debt service and $12,000 of reserves, leaves $129,000. With $3,200,000 invested, the return is 4.03%.
Cash-on-cash, cap rate and IRR
| Measure | Includes debt? | Covers |
|---|---|---|
| Cap rate | No | One year, on the price |
| Cash-on-cash | Yes | One year, on your cash |
| IRR | Usually | The whole hold, including the sale |
When cash-on-cash is below the cap rate, the debt costs more than the property yields, and borrowing is lowering your current return. That can still be a sound decision if you expect growth, but it should be a decision.
What it leaves out
- Principal paydown. Part of each loan payment builds equity, but it counts as a cost here.
- Appreciation and sale. All of the profit at sale is outside the number. See the equity multiple calculator.
- Taxes. It is pre-tax, and depreciation can change what you keep.
- Later years. It is a snapshot, so a value-add plan can look poor in year one and fine in year three.
Frequently asked
- How do you calculate cash-on-cash return?
- Divide annual pre-tax cash flow by the total cash you invested. Cash flow is NOI less debt service and reserves.
- What is a good cash-on-cash return?
- It depends on the deal's risk, its financing, and what else you could earn on the cash. This calculator applies no benchmark.
- Is cash-on-cash the same as ROI?
- It is one kind. Cash-on-cash counts only the year's cash flow, while a total return also counts principal paydown and profit at sale.
Keep reading
Commercial mortgage calculator
Payment, balloon, LTV and DSCR for a commercial loan.
Equity multiple calculator
Equity multiple and IRR from a stream of cash flows.
NOI calculator
Net operating income from income and expense lines.
Pacific Software Ventures built this tool and guide, and sells AI consulting and training to commercial real estate firms. This is general education, not investment, legal or tax advice.
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