Cash-on-Cash Return Calculator Widget

Let investors measure a deal by the cash they really put in. Enter one year's pre-tax cash flow and either the total cash invested or its parts - down payment, closing costs, rehab and other up-front money - to see the cash-on-cash percentage, monthly cash flow and years to recover the investment.

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<iframe src="https://a2z.tools/embed/w/cash-on-cash-return-calculator" title="Cash-on-Cash Return Calculator by A2Z Tools" width="100%" height="560" style="border:0;width:100%" loading="lazy" allow="clipboard-write"></iframe>

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How it works

Cash-on-cash return divides one year of pre-tax cash flow - what is left from rent after operating costs and every mortgage payment - by the cash the investor actually spent to own the property. That cash can be entered as a single total or built up from the down payment, closing costs, rehab or furnishing, and other up-front cash such as loan fees or lender-held reserves, in which case a bar shows how it splits. $6,000 of yearly cash flow on $75,000 invested is 8%. The widget also shows the monthly cash flow and how many years that cash flow would take to hand the investment back, ignoring any sale. A negative cash flow gives a negative return and a warning, and a zero investment is refused because the ratio would be meaningless. Use the rental cash flow widget first if you need the cash flow figure itself.

Calculation method

  • Cash invested = down payment + closing costs + rehab + other up-front cash (or the total entered)
  • Cash-on-cash return = annual pre-tax cash flow / cash invested x 100
  • Monthly cash flow = annual cash flow / 12
  • Years to recover = cash invested / annual cash flow (only when cash flow is positive)

Worked examples

Leveraged single-family rental

Inputs: Cash flow $6,000 a year; $75,000 invested

Result: Cash-on-cash 8%; $500 a month; 12.5 years to recover the cash

6,000 / 75,000 = 0.08.

Investment built up from parts

Inputs: Cash flow $9,600; down payment $40,000, closing $5,000, rehab $15,000

Result: Cash invested $60,000; cash-on-cash 16%; $800 a month; 6.3 years to recover

The bar shows the down payment is two thirds of the cash in the deal.

An illustration, not investment advice.

Limitations

  • A single-year, pre-tax snapshot; it does not discount future cash flows or include a sale.
  • The quality of the result depends on the cash flow figure entered; vacancy and repairs must already be in it.

Where publishers use it

  • A real-estate investing course comparing leveraged and all-cash purchases
  • A turnkey rental provider's property listings
  • A short-term rental host's blog on furnishing budgets and returns
  • A syndication or crowdfunding explainer on preferred returns
  • A podcast's show notes for an episode on analysing a fourplex

Questions

How is cash-on-cash different from cap rate?

Cap rate divides net operating income by the full price and ignores the loan. Cash-on-cash divides the cash flow after mortgage payments by the cash you put in. A $300,000 house with $18,000 NOI has a 6% cap rate whether bought for cash or with 20% down, but its cash-on-cash return differs in each case.

What should be included in cash invested?

Everything you paid out of pocket to acquire and stabilise the property: down payment, closing costs, inspection, loan points, rehab and furnishing, and any reserves the lender required you to deposit. Money borrowed is not included.

Is principal paydown part of the return?

Not in cash-on-cash. The principal portion of the mortgage is subtracted as a cash outflow even though it builds equity. Total-return measures add equity build-up and appreciation; cash-on-cash deliberately looks only at spendable cash.

What is a good cash-on-cash return?

It depends on market, risk and leverage, and investors set their own hurdles. Compare it with what the same cash would earn elsewhere: a 4% bond yield sets a floor that a rental with tenants, repairs and vacancies should beat.

Why does the figure change after the first year?

Rents and expenses change while the mortgage payment usually stays fixed, so cash flow drifts. A refinance that pulls cash out also lowers the cash still invested. Recalculate each year with the new figures.

Cite or recommend this tool

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A2Z Tools Cash-on-Cash Return Calculator
https://a2z.tools/embed/cash-on-cash-return-calculator

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