See the true cash return on a rental property — the metric every investor uses to compare deals at a glance.
Model down payment, closing costs, rehab, rent, and operating expenses to instantly see your cash-on-cash return, monthly cash flow, and cap rate side-by-side.
Direct answers to the most common questions, in plain language. Skim if you're in a hurry; dig deeper below.
Annual pre-tax cash flow divided by the cash you actually invested.
Cash-on-cash (CoC) return measures the annual cash flow a rental property produces against the actual cash you put into the deal — down payment, closing costs, and rehab. It tells you what return your money is really earning, ignoring appreciation and loan paydown.
Most investors target 8–12% on a stabilized rental.
A healthy stabilized rental typically targets 8–12% cash-on-cash. Below 5% you are mostly betting on appreciation; above 15% usually signals either an exceptional deal, a riskier market, or numbers that need stress-testing.
Cap rate ignores financing. CoC includes it.
Cap rate uses NOI divided by purchase price and assumes you paid cash. Cash-on-cash uses your actual cash flow (after the mortgage) divided by your actual cash invested. CoC is the metric that captures leverage — and leverage is what makes rentals interesting.
Yes — after a successful refinance that pulls all your cash out.
If you BRRRR a property and refinance out 100% of your cash invested, your remaining cash invested is zero — making your CoC return technically infinite. This is why experienced investors chase forced-equity deals rather than turnkey purchases.
The mechanics in short answers — no jargon, no upsell.
Down payment plus closing costs plus rehab. This is the money out of your pocket on day one — and the base your return is measured against.
Rent minus operating expenses minus mortgage payment. Multiplied by 12 to give you annual pre-tax cash flow.
Expressed as a percentage. A $4,800 annual cash flow on $60,000 invested is an 8% cash-on-cash return.
NOI divided by purchase price. Compare CoC and cap rate side-by-side to separate the deal's underlying quality from the effect of your financing.
Designed so anyone can model their situation in under a minute, with or without a finance background.
A single percentage that lets you rank 5 properties in 30 seconds.
Includes mortgage payment, taxes, insurance, maintenance, vacancy, and management.
Unlike cap rate, CoC reflects how much your down payment is actually earning.
Slide rent down 10% or rate up 1% and see if the deal still pencils.
If CoC is under 4% with realistic expenses, the deal is probably a pass.
Includes closing costs and rehab — the line items most calculators ignore.
Everything you might ask before, during, or after using this tool.
No. ROI typically includes appreciation, mortgage paydown, and tax benefits in addition to cash flow. Cash-on-cash is narrower — it isolates the cash return on the cash invested in year one. This makes it useful for comparing deals, but it understates total return.
No. Cash-on-cash deliberately ignores appreciation because appreciation is speculative and unrealized. If you want to include it, calculate total return on investment separately. CoC should stay focused on the cash actually hitting your bank account.
Property taxes, insurance, repairs and maintenance (typically 5–10% of rent), property management (8–10% of rent if you use a manager), vacancy reserve (5–8% of rent), utilities you pay, HOA, lawn care, and pest control. Do not include the mortgage payment — that is separate.
Most investors use 5–8% of gross rent. In a tight rental market you might use 3–5%; in a student-housing or seasonal market, 10% is safer. The reserve covers months between tenants and unexpected turnover costs.
Because cap rate ignores your mortgage payment. Once you subtract debt service, the cash flow drops — but so does the cash you actually had to put in. The interplay between these two determines whether your CoC is higher or lower than the cap rate.
CoC is pre-tax by convention. Rental real estate has significant tax shields — depreciation, mortgage interest deduction, expense write-offs — so after-tax cash flow is often noticeably higher than pre-tax. Run an after-tax version with your CPA for a true picture.
When you refinance a property and pull out 100% of the cash you originally invested, your remaining cash invested is zero. Any positive cash flow above that becomes infinite return on infinite-leverage terms. This is the engine behind the BRRRR strategy.
Yes, but be aware that STR expenses are higher (cleaning, supplies, platform fees, more frequent turnover) and revenue is more volatile. Build in larger vacancy and maintenance reserves, and stress-test occupancy at 50–60% to see if the deal still works.
Other Lazysmirk tools that pair well with this one.
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Underwrite a Buy-Rehab-Rent-Refinance-Repeat deal — cash recovered on refi, money left in, monthly cash flow, and cash-on-cash return.
Calculate gross yield, net yield, and cap rate on a rental property — with realistic expense lines for tax, insurance, vacancy, and capex.
You can compare deals by gross rent multiplier, cap rate, GRM, or a dozen other metrics. But the one that answers "what is this deal actually earning my money?" is cash-on-cash return. It strips away accounting fictions and tells you the cash, in your hand, divided by the cash you put down.
That is why every experienced rental investor opens with CoC. It is honest, comparable across markets, and immediately stress-testable.
Cap rate is a property-quality metric. It ignores financing and answers "if I paid all cash, what would this property yield?" Use cap rate when you are comparing markets, evaluating commercial deals, or you actually intend to pay cash.
Cash-on-cash is a leverage-aware metric. It answers "with my financing, what is my money earning?" Use CoC when you are financing the property, comparing your equity efficiency, or deciding between a higher down payment and a lower one.
Sophisticated investors track both. A high cap rate with a low CoC is a warning sign that financing is barely working. A low cap rate with a high CoC means leverage is doing the heavy lifting — fine in good times, brutal in bad ones.
8% CoC is the soft floor for a stabilized rental in most US markets in 2026. Below 8% and you are probably betting on appreciation or paying for an emotional reason. Above 8% suggests the deal is working on cash flow alone.
10% CoC is the comfortable middle. This is where most cash-flow-focused investors aim. You have a buffer for surprise expenses, the deal works without appreciation, and you are getting a real return on your capital.
12%+ CoC is excellent — but verify the numbers. Are you using realistic vacancy and maintenance reserves? Are taxes and insurance accurate? Many "12% deals" become 7% deals once expenses are honest. If the numbers hold up, you have a winner.
Lowering your down payment from 25% to 20% almost always raises your CoC — because the denominator shrinks faster than the cash flow. But that extra leverage also makes the deal more fragile to rate changes, vacancies, and expense overruns.
Conversely, paying all cash typically gives the lowest CoC but the safest cash flow. Many investors split the difference: 20–25% down, then let cash flow pay the loan down over time.
Use the calculator above to see the trade-off in your specific deal. The "all-cash vs 20% down vs 25% down" comparison row exists for exactly this reason.
Two short notes worth reading before you trust any number on this page.
Your loan amount, rate, and prepayment inputs never leave your device. No accounts, no cookies on your numbers, no analytics on the values you type. Disconnect from the internet and it still works.
We are not a bank, NBFC, advisor, broker, or distributor of any financial product. The numbers shown here are estimates for educational purposes only, based on the inputs you provide.
Results are not financial, legal, or tax advice. Please consult a qualified professional before any decision about your loan, investments, or personal finances. Actual loan terms and charges depend on your bank and individual circumstances.
