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Cash-on-cash return

What cash-on-cash return remains after vacancy, operating costs, and debt service?

Your numbers

Cash-on-cash return

6.1%

Monthly cash flow$458
Annual cash flow$5,496

Tip. Educational estimate with the assumptions listed on this page. Not tax, legal, or investment advice.

Assumptions

  • Operating costs exclude the mortgage, which has its own field.
  • Capex reserves belong in ops if you want an honest CoC.
  • Tax effects are excluded.

Explore the numbers

Examples

Load a scenario, then change one input at a time.

Example 1

Standard buy

$90k in, modest cash flow.

Cash-on-cash return

6.1%

Example 2

Thin deal

Higher debt service.

Cash-on-cash return

-1.4%

Example 3

Arbitrage-style cash in

Smaller denominator.

Cash-on-cash return

98.7%

What this calculates

Turn monthly rent, vacancy, ops, and debt service into annual cash flow divided by cash invested.

How to use it

  1. Cash invested is down payment plus closing plus initial capex.
  2. If CoC looks spectacular, the denominator is probably too small or ops are incomplete.
  3. Compare with cap rate to see how much of the return is leverage.

Common mistakes

  • Using purchase price instead of cash in.
  • Zero vacancy forever.
  • Leaving management out because you will self-manage.

Formula

Annual CF = (rent × (1 − vacancy%) − ops − debt) × 12. CoC = annual CF ÷ cash invested.

FAQ

Why is CoC higher than cap rate?

Leverage. It can also go negative faster when rates rise.

Is 12% CoC good?

Only if the cash flow survives a vacancy and a repair year. Percentage without a stress test is a slogan.

Does this work for arbitrage?

Yes if cash in is deposits and furnishings. The Airbnb ROI tool is the fuller version.

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