See the return on the money you actually put in. Cash-on-cash takes your annual cash flow after the mortgage and divides it by your real out-of-pocket investment.
▶ Run the CalculatorOpens live in the Rental Flow app - no account needed.
Where cap rate ignores financing, cash-on-cash is all about it. It measures the annual pre-tax cash flow a property throws off - after the mortgage payment - against the cash you invested to acquire it (down payment plus any up-front costs). It's the number that answers "what is my money actually earning here?"
Annual cash flow is rental income minus operating expenses minus annual debt service (your mortgage payments). Cash invested is the purchase price minus the loan amount - your down payment - the part of the deal you funded yourself.
| Purchase price | $250,000 |
| Loan amount | $200,000 |
| Cash invested (down payment) | $50,000 |
| Annual rental income | $24,000 |
| Annual operating expenses | $8,400 |
| Annual mortgage payments | $15,170 |
| Annual cash flow | $430 |
| Cash-on-cash return | 0.86% |
This example is deliberately tight - it shows how a thin margin and a high rate can leave a leveraged deal barely cash-flow positive. Change the down payment, rate, or rent and watch the return move.