How to read this result
In the default example, cash-on-cash return is 10.00%. Results describe this input scenario; they are not a recommendation.
Change one assumption at a time to see how it affects the scenario. Compare periods and cost definitions consistently. Negative results show a modeled shortfall; an unavailable ratio needs a valid denominator.
Formula and methodology
Divide annual pre-tax cash flow after required cash expenses and debt service by the total cash invested. Include acquisition equity and other cash contributed to the investment in the denominator.
Enter percentages as whole numbers: 5 means 5%. When used as a factor, the calculation divides a percentage by 100. Percentage outputs multiply the final ratio by 100. Calculations retain precision internally; displayed amounts and rates are rounded to two decimals.
Variables and input definitions
- Annual pre-tax cash flow (USD/year)
- Cash flow after operating expenses and debt service, before income tax.
- Total cash invested (USD)
- Total investor cash committed to the deal. Minimum: 0.
Worked example
This example uses the exact prefilled inputs above. Reset defaults to restore this scenario after making changes.
| Item | Default scenario |
|---|---|
| Annual pre-tax cash flow | $12,000.00 |
| Total cash invested | $120,000.00 |
| Item | Default scenario |
|---|---|
| Cash-on-cash return | 10.00% |
Assumptions and limitations
Simple annual cash-on-cash measure; excludes time value of money, appreciation and sale proceeds.
Results describe this input scenario; they are not a recommendation.
The tool uses values you supply. It does not retrieve market prices, verify leases or inspect a property. Results exclude items outside the listed inputs. Review local requirements and the relevant contract when a payment, fee or allocation depends on them.
Common mistakes
Using the full property price as invested cash turns the metric into something other than cash-on-cash. Leaving closing costs, furnishing or initial capital contributions out can inflate the return.
Sources and method references
These references provide context for the method and terminology. They do not endorse this tool or validate your property assumptions.
- Office of the Comptroller of the Currency — Comptroller's Handbook — Commercial Real Estate LendingNOI, direct capitalization, cap-rate valuation and DCF concepts for commercial real estate.
- Appraisal Institute — Basic Formulas — Income CapitalizationIncome/cap-rate/value relationships, gross income multiplier and debt-coverage formula references.
Frequently asked questions
Is cash-on-cash the same as total investment return?
No. This annual cash metric does not include appreciation, loan principal paydown, exit proceeds or a multi-year internal rate of return.
Can cash-on-cash be negative?
Yes. Negative annual cash flow divided by positive invested cash produces a negative percentage. The calculator preserves that loss rather than hiding it.