Cash-on-Cash Return Calculator

Cash-on-cash = annual pre-tax cash flow ÷ total cash invested. Cash flow is rent minus operating expenses minus mortgage payments; cash invested is your down payment plus closing costs plus rehab. $6,000 annual cash flow on $90,000 invested is a 6.67% return.

Cap rate ignores financing — it's the return as if you paid all cash. Cash-on-cash includes your mortgage and down payment, so it reflects your actual leveraged return. A property with a modest cap rate can show a strong cash-on-cash return when financed well; buy all-cash and the two numbers converge.

Appreciation, the principal you pay down each month (which builds equity), and tax advantages like depreciation. So a property can have low cash-on-cash but still build wealth through equity and appreciation. Use it to compare cash flow, not to judge total return alone.