Cash-on-Cash Return Calculator
Measure annual cash flow against the actual cash you invested in a property, the return that tells you what your own money is earning.
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Cap rate measures the building. Cash-on-cash measures your position in it. It divides the cash the property produces in a year by the cash you actually put in — deposit, closing costs and any work done before letting — so it answers the question an investor really has: what is my money earning?
Because it includes financing, leverage changes it dramatically. The same building can show a 5% cap rate and a 12% cash-on-cash return, or a negative one, depending entirely on how it was funded.
The formula
Cash-on-cash return = annual pre-tax cash flow ÷ total cash invested × 100. Cash invested is the deposit plus closing costs plus any pre-letting work — every unit of your own money that went in, not the purchase price.
Worked example
An 80,000 deposit with 12,000 of closing costs and 8,000 of work is 100,000 of cash invested. If the property produces 7,200 of cash flow a year after the mortgage and every running cost, the cash-on-cash return is 7.2%, and it takes about 13.9 years for the property to return your original cash.
What it leaves out
It ignores capital growth and the principal being repaid each month, both of which build wealth without appearing in cash flow. A property can show a poor cash-on-cash return and still be a good investment — but you have to be able to fund the shortfall while you wait.
Put your number on the page that answers the question
Buyers remember whoever gave them the answer. A property page of your own carries this calculator, your listings and a WhatsApp button, so the next question comes to you.
Create your free property pageFrequently asked questions
What is a good cash-on-cash return?
It depends on the market and what else your money could do. Many investors want it to beat what a low-risk deposit account pays by a clear margin, since property carries work, illiquidity and tenant risk that a savings account does not.
How is it different from cap rate?
Cap rate measures the asset regardless of financing; cash-on-cash measures your return on the cash you personally committed. Borrowing more raises cash-on-cash if the rent covers it, and sinks it if the rent does not.
Should capital growth be included?
Not in this figure. Cash-on-cash deliberately measures cash only, because growth is unrealised and uncertain. Look at total return when you want both, and treat the growth assumption there with appropriate scepticism.
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