Underwrite
Cash on cash return calculator for leveraged rentals
Cap rate pretends you paid cash. Cash-on-cash asks what your actual dollars in the deal earned after the mortgage. Enter annual pre-tax cash flow and total cash invested — get CoC %.
Assumptions
Returns stack
- Cash-on-cash
- —
When to use
Comparing a high-down deal to a skinny-down deal, checking whether leverage helps or just adds risk, or explaining returns to a partner who only cares about the check they wrote.
When not to
Don’t treat year-one CoC as IRR, and don’t ignore closing costs or teaser interest-only payments that fake a pretty first year.
Assumptions: Usually pre-tax, year-one style. Cash invested = down payment + closing + cash rehab unless you say otherwise.
Worked examples
Input
Cash flow $8,400 / yr Cash invested $70,000
Output
CoC 12.0%
Leverage can lift the return on the dollars you still have in the deal.
Input
All-cash $350,000 Cash flow = NOI $21,000
Output
CoC 6.0%
Same property, all cash — the story changes when there’s no loan.
Common traps
- CoC is usually pre-tax and year-one style — not IRR.
- Forgetting closing costs inflates CoC.
- Interest-only teaser payments can fake a pretty year-one CoC.