What is a good cash-on-cash return?

Many rental investors target a cash-on-cash return in the 8–12% range, but there is no universal benchmark. What counts as 'good' depends on your market, risk tolerance, and whether you're also counting appreciation and loan paydown. Use it to compare deals, not as a hard pass/fail line.

What counts as total cash invested?

Your actual out-of-pocket cash to acquire the property: the down payment, closing costs, and any up-front renovation or rehab. It does NOT include the financed portion of the purchase price — that's the whole point of a leveraged return metric.

How is cash flow different from NOI?

Net operating income (used in the cap rate) is income minus operating expenses, before the mortgage. Cash flow goes one step further and subtracts mortgage debt service, leaving the cash that actually lands in your pocket. Cash-on-cash uses cash flow; cap rate uses NOI.

Does cash-on-cash include appreciation and tax benefits?

No. Cash-on-cash is a first-year, pre-tax snapshot of cash yield. It deliberately excludes appreciation, principal paydown, and tax benefits like depreciation. Those add to your total return but aren't cash in hand this year, so they're left out of this ratio.

Free real estate investor tool

Cash-on-Cash Return Calculator

Cash-on-cash return is your leveraged annual yield: pre-tax cash flow after the mortgage, divided by the cash you actually put in. Enter your annual cash flow and total cash invested to see the return. Updates as you type.

Your numbers

Annual pre-tax cash flow

Rent collected minus all expenses including mortgage payments. Can be negative.

Total cash invested

Down payment + closing costs + up-front rehab — your out-of-pocket cash.

Result

Cash-on-cash return: 8.50%
Annual cash flow: $8,500

How this is calculated

The formula. Cash-on-cash return = annual pre-tax cash flow ÷ total cash invested, expressed as a percent. $8,500 of yearly cash flow on $100,000 of invested cash is an 8.5% cash-on-cash return.

It’s leveraged. Unlike the cap rate, cash-on-cash doesaccount for your mortgage. The numerator is what’s left after debt service, and the denominator is only the cash you actually put in — down payment, closing costs, and up-front rehab — not the full purchase price. It answers “what is my invested cash earning?”

Pre-tax, year one. This is a first-year, pre-tax snapshot. It excludes appreciation, loan paydown, and tax benefits like depreciation — all of which add to total return but aren’t cash in hand this year.

Tenvale keeps your cash flow current

Rent collection, expenses, and per-property cash flow are tracked automatically — so the cash-flow number behind your return is real, not a projection.

Start free — no card required

Frequently asked questions

What is a good cash-on-cash return?: Many rental investors target a cash-on-cash return in the 8–12% range, but there is no universal benchmark. What counts as 'good' depends on your market, risk tolerance, and whether you're also counting appreciation and loan paydown. Use it to compare deals, not as a hard pass/fail line.
What counts as total cash invested?: Your actual out-of-pocket cash to acquire the property: the down payment, closing costs, and any up-front renovation or rehab. It does NOT include the financed portion of the purchase price — that's the whole point of a leveraged return metric.
How is cash flow different from NOI?: Net operating income (used in the cap rate) is income minus operating expenses, before the mortgage. Cash flow goes one step further and subtracts mortgage debt service, leaving the cash that actually lands in your pocket. Cash-on-cash uses cash flow; cap rate uses NOI.
Does cash-on-cash include appreciation and tax benefits?: No. Cash-on-cash is a first-year, pre-tax snapshot of cash yield. It deliberately excludes appreciation, principal paydown, and tax benefits like depreciation. Those add to your total return but aren't cash in hand this year, so they're left out of this ratio.

More free landlord tools

Get the full MA landlord toolkit

Plain-English guides on security deposits, evictions, condition statements, and triple-damages safeguards — written for owner-operators. Two emails a month, unsubscribe any time.

We use double opt-in. You'll get one confirmation email before anything else.