SuperCalc

Cash on Cash Return Calculator

Calculate your real estate investment's cash on cash return to evaluate annual pre-tax cash flow relative to your initial cash investment. Industry standard: 8-12% is considered good.

Property Investment

Income

Parking, laundry, etc.

Operating Expenses

% of effective income
% of gross income

Financing

Cash on Cash Return Analysis

Investment Benchmark

Target CoC Return:%

Quick Tips

  • 8-12% CoC return is generally considered good
  • Higher leverage can increase CoC return but adds risk
  • Don't forget reserves for maintenance and vacancies
  • Consider tax benefits not shown in pre-tax calculations
  • Compare to other investment opportunities

Understanding Cash on Cash Return

Cash on cash return (CoC) is a rate of return ratio that calculates the total pre-tax cash flow earned on the total cash invested. It's one of the most important metrics for evaluating rental property investments because it shows the actual return on your out-of-pocket investment.

The Formula

Cash on Cash Return = (Annual Pre-Tax Cash Flow / Total Cash Invested) × 100
Where:
Annual Pre-Tax Cash Flow = NOI - Annual Debt Service
Total Cash Invested = Down Payment + Closing Costs + Repairs + Reserves

What Makes a Good CoC Return?

< 5%

Below market average. Consider other investments or improving operations.

5-8%

Fair return. May be acceptable in appreciation markets.

8-12%+

Good to excellent. Target range for most investors.

CoC vs Other Metrics

Cash on Cash vs Cap Rate

  • CoC includes financing impact; cap rate doesn't
  • CoC measures return on actual cash invested
  • Cap rate measures property's inherent return
  • Both are important for different reasons

Cash on Cash vs ROI

  • CoC is annual; ROI is total return
  • CoC excludes appreciation and equity buildup
  • ROI includes all returns over holding period
  • CoC better for cash flow analysis

Factors Affecting CoC Return

Factors That Increase CoC

  • Higher rental income
  • Lower operating expenses
  • Smaller down payment (more leverage)
  • Lower interest rates
  • Value-add improvements that increase rent

Factors That Decrease CoC

  • High vacancy rates
  • Deferred maintenance
  • Rising property taxes/insurance
  • Large down payment requirements
  • High interest rates

Investment Strategy Considerations

  • Market Type: Cash flow markets typically offer higher CoC returns than appreciation markets
  • Property Class: C-class properties often have higher CoC but more management intensive
  • Financing Strategy: Higher leverage increases CoC return but also increases risk
  • Hold Period: CoC is most relevant for buy-and-hold investors focused on cash flow
  • Tax Considerations: This calculator shows pre-tax returns; actual after-tax returns may be higher due to depreciation

Limitations of Cash on Cash Return

  • Doesn't account for appreciation or equity buildup
  • Ignores tax benefits from depreciation and deductions
  • Doesn't consider time value of money like IRR does
  • Can be manipulated by leverage amount
  • Should be used alongside other metrics for full analysis