Cash on cash return calculator

Where AI changes the answer

Cash-on-cash return is the levered equity yield — the annual cash flow you actually receive relative to the cash you actually deployed. Unlike cap rate (which ignores financing), cash-on-cash tells you how efficiently your equity is working inside a specific deal structure. **What moves your cash-on-cash return the most?** **1. Leverage (down payment)** — Lower equity in means higher CoC, all else equal. But more debt means more debt service, which reduces cash flow and increases DSCR risk. This is the tension every CRE investor navigates. A 25% down payment on a $2M property versus 30% down changes your cash invested by $100,000 — and that $100,000 difference compounds dramatically at a 10% CoC. **2. Interest rate** — Every 50 basis points (0.50%) shift in your loan rate changes annual debt service meaningfully. On a $1.5M loan at 7.0% versus 6.5%, the difference is roughly $4,500/year in additional debt service — and that $4,500 comes directly out of your cash-on-cash return. **3. Rent growth** — Higher rents increase NOI, which increases pre-tax cash flow, which increases CoC. A 3% rent bump on a 10-unit property at $2,000/unit average is $7,200/year in additional cash flow. At $250,000 equity invested, that is nearly 3 additional percentage points of cash-on-cash return. These sensitivities are ESTIMATES — model them in your actual underwriting using your real loan terms, local rent comps, and verified operating expenses. Cash-on-cash is a snapshot metric; pair it with an IRR model for multi-year holds. Related tools: use the NOI Calculator to build your operating income figure, the DSCR Calculator to confirm lender coverage, and the Cap Rate Calculator to benchmark the unlevered yield against market comps before you apply leverage.

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