Formula

How to Calculate Cash-on-Cash Return

To calculate cash-on-cash return, divide annual pre-tax cash flow by the total cash invested. It is a helpful leveraged-return metric, but it depends on the cash flow and cash invested assumptions.

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Estimates are based on your inputs and assumptions. DealSharp does not provide financial, investment, legal, tax, or lending advice.

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how to calculate cash-on-cash return

Run the number, then pressure-test the assumptions.

To calculate cash-on-cash return, divide annual pre-tax cash flow by the total cash invested. It is a helpful leveraged-return metric, but it depends on the cash flow and cash invested assumptions.

Use this page to understand the metric directionally, then compare it against financing, reserves, repair risk, cash flow, and your own constraints.

Formula

Cash-on-cash return = annual pre-tax cash flow / total cash invested

Example

If annual cash flow is $4,800 and total cash invested is $80,000, cash-on-cash return is 6%.

Use the formula inside a full deal model

DealSharp helps compare assumptions, debt service, cash flow, and risk flags so this metric is not reviewed in isolation.

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Plain-English explanation

How to read this number

The useful move is not treating one number as a final answer. Use it to decide which assumptions deserve more review, then compare the result against cash flow, financing, reserves, repair risk, and your own constraints.

Inputs required

Metric inputs shown in the formula or calculator.
Income, expense, debt, value, and cash assumptions where relevant.
Investor-provided numbers that should be checked against source documents.

Outputs explained

Scenario estimate based on the inputs.
Plain-English context for comparing the metric.
Limitations and assumptions to review before relying on the result.

Assumptions to review

Inputs are estimates supplied by the user.
Market rent, lender terms, taxes, insurance, repairs, and legal details can change the result.
DealSharp does not provide financial, investment, legal, lending, tax, or accounting advice.

What this tells you

Cash-on-cash return shows annual cash flow relative to actual cash in the deal.
It can compare different loan, down payment, rehab, and closing-cost scenarios.
It is useful for rental and BRRRR analysis when cash invested varies.

What this does not tell you

It does not measure all wealth creation or risk.
It may exclude appreciation, tax impact, principal paydown, refinance proceeds, or sale outcomes.

Common mistakes

Leaving closing costs or rehab out of cash invested.
Using gross rent instead of cash flow.
Comparing a stabilized estimate to an unstabilized current-year estimate.

Questions investors ask

FAQ

Is cash-on-cash return annual?

It is usually annual unless stated otherwise. Monthly cash flow should be multiplied by 12 before calculating.

Can cash-on-cash return be negative?

Yes. If modeled annual cash flow is negative, the cash-on-cash return will be negative.

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Run the full deal before deciding

This page helps with one metric or workflow. DealSharp is built for full real estate deal analysis: assumptions, financing, cash flow, repair scenarios, DSCR, cap rate, and risk flags based on your inputs.