Cash-on-Cash Return Calculator

What cash-on-cash actually measures

Cash-on-cash return is the pre-tax cash a property throws off in a year, divided by the cash you actually put in. It is the return an investor feels, which is why it differs so sharply from the cap rate: cap rate is unlevered, cash-on-cash is not.

Worked example

A $12,500,000 industrial asset with $850,000 NOI, financed with $8,750,000 of debt at $610,000 annual debt service, $3,750,000 down and $250,000 of closing costs:

• Annual cash flow: $850,000 − $610,000 = $240,000
• Cash invested: $3,750,000 + $250,000 = $4,000,000
• Cash-on-cash: $240,000 ÷ $4,000,000 = 6.00%

The same asset has a 6.80% cap rate. Leverage at this cost slightly reduces the cash return — which tells you the debt is priced close to the asset’s unlevered yield.

What it leaves out

• Principal amortization. Part of the debt service builds equity. Cash-on-cash treats it as a cost.
• Appreciation and rent growth. Entirely absent.
• Tax. Depreciation frequently makes after-tax returns better than this figure suggests.
• Year one only. A property with escalating rents improves; this is a snapshot.

Build the income first with the NOI calculator, and check the financing works with DSCR.