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Cash-on-Cash Return Calculator

Calculate your annual return on invested capital. Factor in financing, down payment, and operating income for a complete picture of your investment returns.

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Financing Details

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Minimum 30% down payment required
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Estimated at 6% of purchase price. Actual costs vary.

What is Cash-on-Cash Return?

Cash-on-cash return measures the annual pre-tax cash flow you receive relative to the cash you invested. Unlike cap rate, it accounts for financing and shows your actual return on invested capital.

Formula:CoC = Annual Cash Flow ÷ Total Cash Invested × 100

Leverage Effect

Positive Leverage: When your cap rate exceeds your loan interest rate, using debt amplifies returns.

Negative Leverage: When interest rates exceed cap rates, financing actually reduces your cash-on-cash return.

In today's environment with higher interest rates, many LA deals have neutral or negative leverage.

Important Disclaimer

This calculator is for informational and educational purposes only. It does not constitute investment, financial, legal, or tax advice. Returns vary based on property condition, market conditions, financing terms, and other factors.

Always consult with qualified professionals before making real estate investment decisions.

Frequently Asked Questions

What is a good cash-on-cash return?

Target returns vary by risk profile and market. In Los Angeles, stabilized multifamily often yields 5-7% cash-on-cash. Value-add investors typically target 8-12%+ after executing their business plan. Compare to alternative investments and your required return.

How is this different from cap rate?

Cap rate assumes an all-cash purchase and represents the property's yield. Cash-on-cash return shows your actual return on the cash you invested, accounting for financing. With leverage, they can differ significantly.

Should I include closing costs?

Yes, for accurate analysis include all cash required to close: down payment, closing costs, and any immediate capital expenditures. This gives you the true return on your total cash investment.

What about appreciation and tax benefits?

Cash-on-cash return measures current yield only. For total return, also consider appreciation, principal paydown, and tax benefits like depreciation. Many successful investments have modest cash-on-cash but strong total returns.

Other Investment Tools

Cap Rate Calculator→1031 Exchange Timeline→

Learn More About Investment Analysis

Investment Strategy Guides→Market Analysis Articles→

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