Calculate cash on cash return percentage from annual cash flow and total investment, or solve for the missing value from two inputs.
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Cash on Cash Return Formula
The cash on cash return calculator uses the relationship between annual cash flow, total cash invested, and the return percentage. You can enter any two values to calculate the third.
- CoC = cash on cash return, as a percentage
- ACF = annual cash flow from the investment, in dollars
- TI = total investment amount, in dollars
To calculate annual cash flow, the formula is rearranged as:
To calculate total investment, the formula is rearranged as:
If you enter annual cash flow and total investment, the calculator finds the cash on cash return percentage. If you enter total investment and cash on cash return, it finds the annual cash flow. If you enter annual cash flow and cash on cash return, it finds the total investment amount.
Cash on Cash Return Benchmarks
Cash on cash return is often used for rental properties and other cash-flowing investments. The ranges below are general reference points, not rules.
| Cash on Cash Return | General Interpretation |
|---|---|
| Below 4% | Low return relative to the cash invested |
| 4% to 7% | Moderate return, depending on risk and market conditions |
| 8% to 12% | Common target range for many cash-flow-focused investments |
| Above 12% | High cash return, but worth reviewing risk, repairs, vacancy, and financing assumptions |
Example Calculations
Example 1: Calculate cash on cash return
You invest $80,000 and receive $7,200 in annual cash flow.
The cash on cash return is 9%.
Example 2: Calculate annual cash flow
You want a 10% cash on cash return on a $65,000 total investment.
You need $6,500 in annual cash flow to earn a 10% cash on cash return.
FAQ
What counts as annual cash flow?
Annual cash flow is the money left over from the investment during one year after operating income and expenses are considered. For a rental property, this usually means rental income minus expenses such as mortgage payments, property taxes, insurance, maintenance, management fees, and vacancy allowance.
What counts as total investment?
Total investment is the amount of cash you personally put into the investment. For real estate, this can include the down payment, closing costs, initial repairs, inspection fees, and other upfront cash costs. It usually does not include the full property purchase price if you used financing.
Is cash on cash return the same as ROI?
No. Cash on cash return focuses on annual cash flow compared with the cash you invested. ROI can include a broader set of gains, such as appreciation, loan paydown, tax effects, and sale proceeds. Cash on cash return is best for measuring yearly cash yield, not total long-term profit.