Cash-on-Cash Return Calculator
Cap rate compares properties. This compares deals.
Work out Cash-on-Cash Return. Cap rate compares properties. This compares deals. States the assumption instead of hiding it.
Cash-on-cash return
0.48%
23.11 monthly cash flow on 58,000 invested
Cap rate and cash-on-cash answer different questions. Cap rate is net operating income over price and deliberately ignores financing, so it compares properties; cash-on-cash includes the mortgage, so it compares deals. Leverage magnifies both directions. A property with a modest cap rate can produce an excellent cash-on-cash return with a small deposit — and a catastrophic one if rates rise or the rent falls, because the mortgage does not shrink with the income. Debt service coverage is what lenders look at. Most want 1.25 or better, meaning the net income covers the mortgage a quarter over. Below 1.0 the property does not pay for itself and the shortfall comes from elsewhere.
How the Cash-on-Cash Return Calculator works
Cash-on-cash return and cap rate side by side, with monthly cash flow and debt service coverage. Cap rate deliberately ignores financing; cash-on-cash does not, which is why they answer different questions.
Also known as: cap rate versus cash on cash · rental property cash flow · return on a rental deposit · debt service coverage ratio
Not financial advice. This calculator is for planning and illustration, not financial advice. Real products carry fees, taxes, and terms it does not model. Confirm figures with your lender or a qualified adviser before committing.
Frequently asked questions
What is cash-on-cash return?
Annual cash flow divided by the cash actually invested — deposit plus purchase costs. It measures the return on money you put in rather than on the property's value.
How is it different from cap rate?
Cap rate is net operating income over price and excludes the mortgage entirely, so it compares properties on their own merits. Cash-on-cash includes financing, so it compares deals as structured.
What does leverage do to the return?
Magnifies it, in both directions. A small deposit can turn a modest cap rate into an excellent cash-on-cash return — and into a catastrophic one if rates rise or the rent falls, because the mortgage does not shrink with the income.
What is debt service coverage?
Net operating income divided by mortgage payments. Lenders typically want 1.25 or better; below 1.0 the property does not pay for itself and the shortfall comes from elsewhere.
What counts as operating costs?
Everything except financing — management, maintenance, insurance, tax, service charges. Mortgage payments are deliberately excluded, which is what makes net operating income comparable across differently-financed properties.
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