Cash-on-Cash Return Calculator for Rental Property
Weigh a rental's opening-year cash from gross rent, vacancy, costs and loan terms against your down payment, cash-paid closing and other starting money.
What This Calculator Does
This page works out a cash on cash return. It takes the rent cash a property brings in over its opening 12 months of operation and shows it as a share of everything you spent to get going. That starting pile holds your down payment and any closing costs paid in cash, plus setup work, furniture and reserve funds. Rent goes in at its scheduled gross level, and the tool then subtracts vacancy, collection loss and your entire monthly cash budget. Figures stay nominal, before income tax. Appreciation and a sale are left out.
Who Is This For
Use it when you're buying or holding a rental, or advising on a deal, and want to test a specific yearly cash budget. Enter the cash you really put in up front, with your own assumptions for rent, loss, expenses and the loan. The result won't settle your taxable profit or whether a lender approves you. It guarantees no return.
How It Works
Start with the purchase: price, down payment, closing costs you pay in cash, and any other cash you put in at the start. Then the monthly side: full rent, vacancy and every monthly cost. If a value is zero, type 0. Financing the purchase? Enter a fixed annual rate and choose from 10, 15, 20, 25 or 30-year terms. If you pay cash, set the down payment equal to the price and skip rate and term. Press Calculate. The screen then reports your total starting cash, what the property nets per month and per year, and the annual return.
Frequently Asked Questions
What does the cash on cash return measure?
It measures yearly cash-on-cash: what the rental leaves you against what you put in. Take rent cash for the opening 12 months of operation, after your vacancy, cash costs and principal-and-interest payments. Divide by total starting cash, then multiply by 100. That isn't a cap rate, an IRR, taxable profit or the property's total return. Appreciation, sale proceeds and equity built by paying down principal all sit outside it. Every figure is a nominal scenario you set, never a guaranteed yield or a yardstick for all investments.
Why add other upfront cash besides closing costs?
Because setup work, furniture and reserves you commit can come out of your pocket even though they aren't closing costs. Say you put $100,000 down on a $500,000 price, pay $20,000 at closing and spend $30,000 more getting the place ready. Rent is $4,500 gross, loss is 5%, costs run $900 a month, and a hypothetical 6.5% 30-year note covers the rest. Yearly cash comes to about $10,160.73, roughly 6.77% on $150,000. Leave out the $30,000 and it reads 8.47% on $120,000. Don't count costs you financed, deposits credited back to you, or duplicate entries.
Should I enter scheduled gross rent or collected rent?
Scheduled gross, before vacancy and collection loss. At $4,500 gross with 5% loss, the tool sets aside $225 and works from $4,275 a month. The common slip: entering $4,275 as rent and leaving 5% in place, which cuts it again to $4,061.25. Take the loss off once. Don't repeat it as a cash expense. Confirmed 0 gross rent or 0% loss is accepted, but a blank field is not a zero you typed.
How is an all-cash purchase handled?
The down payment simply equals the full price. Loan principal and payments sit at 0, and rate and amortization term no longer apply. Pay $500,000 cash, $20,000 at closing and $30,000 in other upfront cash, with $4,500 gross rent, 5% loss and $900 in monthly costs. That's $40,500 a year on a $550,000 base, about 7.36%. Paying cash doesn't make this a cap rate. Your starting cash and cash allowances can land somewhere different from a price-and-NOI figure.
Why is there no return percentage when nothing goes in up front?
Because the percentage divides by your starting cash, and with zero there is nothing to divide by. That holds even when rent leaves a surplus. Take $500,000 fully financed, zero closing or extra cash, 6.5% over 30 years, $4,500 rent, 5% vacancy and $900 in costs. Cash flow is about $2,575.92 a year, yet no percentage appears. The return isn't 0%, and it isn't unlimited either. Judge that deal by its cash flow alone. None of this means a no-money-down loan or a closing without costs is actually available to you.
How does negative cash flow differ from exactly zero?
Negative flow gives a negative percentage, as long as you have cash in the deal, and it means you'll be adding money from your own account. A flow of exactly 0 shows 0%. Try it: $60,000 down on $300,000, $10,000 at closing, $5,000 extra cash, a 0% 10-year loan, $3,000 rent, no vacancy and $1,000 in costs. The $2,000 loan payment leaves $0, so the return is 0% on $75,000. That 0% rate is a test input, not a quote any lender offers. The label follows the exact flow, not a $0 that only looks that way after rounding.
Which costs and reserves belong in the monthly cash budget?
Recurring cash costs, each entered once. Start with property tax and insurance: homeowners, wind, flood, mortgage. Add association dues, repairs, management and the reserves or allowances you really keep funding. Leave out the modeled principal and interest, the vacancy already deducted, and any upfront capital. A reserve committed at the start enlarges your capital base; it doesn't become a monthly expense on its own. The pre-loan cash subtotal draws only on these allowances, and it isn't normalized accounting or a lender's NOI. Tax deductibility and reserve adequacy aren't checked.
Does the loan length shift the return window or its accuracy?
No. The return always covers the opening 12 months. Pick 15 or 30 years and you're choosing how the loan amortizes: the payment moves, but the investment period stays put. Payments are computed precisely from the fixed note rate, which is neither an APR nor the rounded number on a lender's statement. Both yearly cash flow and the return run on full, unrounded values. For a lifetime result, never multiply a rounded monthly amount or the yearly percentage by how long the loan lasts. Rent growth, partial-year adjustments, inflation and a sale stay outside the model. So do NPV/IRR, any tax math and a lender's own review.