See the return on the actual cash you put into a deal — after the mortgage. Enter your numbers; we'll do the math.
Gross rent collected per month.
Taxes, insurance, maintenance, PM fees, vacancy — but NOT the mortgage P&I.
Principal and interest only. Set to 0 for an all-cash purchase.
Cash you put down at closing.
Lender fees, title, escrow, inspection — your out-of-pocket closing cash.
Initial make-ready or rehab cash before the unit is rent-ready.
Cash-on-Cash Return
6.5%
The 8–12% range most rental investors aim for. Solid cash yield on your invested capital with room for the occasional bad month.
Many investors target 8–12% cash-on-cash.
Every cost held fixed, rent varied. Use it to see the rent you'd need to land in the 8–12% target band. The amber dot is your numbers.
For informational purposes only. Computed from the data you provide; not investment, tax, or financial advice. Consult a qualified advisor before acting on any figure.
Keystone IQ tracks cash-on-cash return live for every property you own — refreshed every page load — alongside cap rate, NOI, and DSCR. Pulls income, expenses, and mortgage payments straight from your bank and mortgage servicer, so the number is always current without a spreadsheet.
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Cash-on-cash return (CoC) measures the annual pre-tax cash flow a rental property produces relative to the actual cash you invested to acquire it. Where cap rate ignores financing, cash-on-cash is built around it — it's the return on your money, not the property's full value.
The formula divides annual pre-tax cash flow by total cash invested. Annual cash flow is your rent minus operating expenses minus the mortgage principal-and-interest payment, times twelve. Total cash invested is everything you actually wrote a check for: down payment, closing costs, and any upfront rehab to get the unit rent-ready. The result is the cash yield on the capital you put at risk.
Most buy-and-hold rental investors target somewhere in the 8–12% range, though "good" depends on your market and strategy. A negative number means the property costs you cash every year after the mortgage — viable as an appreciation play, but you're subsidizing it. Single-digit returns under ~6% are common in pricier, appreciation-focused markets where you're buying future value, not current yield.
Returns above ~12% look great, but they're usually the product of heavy leverage, a below-market purchase, or optimistic assumptions. Before you trust a high CoC, re-run it with a realistic vacancy allowance (5–8% of rent) and a CapEx reserve (5–10%) baked into operating expenses — a number that survives those is one you can act on.
Cap rate and cash-on-cash answer different questions. Cap rate (NOI divided by property value) measures the property itself, unlevered — it's the apples-to-apples comparison tool between two deals. Cash-on-cash measures your specific return given how you financed it.
The two diverge because of leverage. Put 25% down on a 6% cap-rate property and your cash-on-cash can land well into double digits — or go negative if the mortgage payment exceeds the property's net income. Use cap rate to compare properties on equal footing, then use cash-on-cash to evaluate the actual deal in front of you with your actual financing. For the property's ability to cover its loan, look at DSCR.
Cash-on-cash is a single-year, pre-tax snapshot. It deliberately ignores three things that matter to your total return: principal paydown (each mortgage payment builds equity that CoC doesn't count), appreciation (often the largest wealth lever in real estate), and tax treatment (depreciation can shelter much of the cash flow from tax).
It also says nothing about year two and beyond. A property at 7% CoC today with below-market rents and a lease renewal coming up may be a far better hold than a 10% CoC property that's already maxed out. Use cash-on-cash to screen a deal at purchase, then track it over time alongside equity growth and a multi-year cash-flow forecast for the full picture.
Most buy-and-hold investors target 8–12%, but it depends on your market and strategy. In appreciation-heavy markets, 4–6% can be acceptable because you're buying future value; in cash-flow markets, investors often want 10%+. Whatever you target, make sure the underlying numbers include a realistic vacancy allowance and a CapEx reserve — a high CoC built on optimistic expenses isn't real.
Cap rate ignores financing — it's NOI divided by the property's full value, used to compare properties on equal footing. Cash-on-cash measures the return on the actual cash you invested, after the mortgage payment. A property with a 6% cap rate can have a 12% cash-on-cash return with leverage, or a negative one if the loan payment outruns the income. Cap rate is the comparison metric; cash-on-cash is the deal-evaluation metric.
Every dollar you actually pay out of pocket to acquire and ready the property: the down payment, closing costs (lender fees, title, escrow, inspection), and any upfront rehab or make-ready work. Don't include the loan amount — that's the bank's money, not yours. For an all-cash purchase, total cash invested is the full price plus closing and rehab, and your mortgage payment is zero.
Yes — that's the whole point of cash-on-cash versus cap rate. Subtract the monthly principal-and-interest payment from your cash flow before annualizing. Use P&I only; if your lender escrows taxes and insurance, those belong in operating expenses, not the P&I field, so you don't double-count them. For an all-cash deal, set the mortgage payment to zero and your cash-on-cash will converge toward the cap rate.
A negative result means the property's rent doesn't cover operating expenses plus the mortgage payment — it costs you cash every year. Common causes: too little rent relative to the loan, an interest rate that outruns the property's yield, or expenses (especially vacancy and maintenance) that were underestimated. It can still make sense as an appreciation or loan-paydown play, but you're funding the gap from your own pocket, so size it deliberately.
No — it's a single-year, pre-tax cash metric. It excludes appreciation (often the biggest wealth lever), principal paydown (equity each payment builds), and depreciation (which can shelter much of the cash flow from tax). Those make your total return higher than cash-on-cash alone suggests. Use cash-on-cash to screen the deal at purchase, then track equity and a multi-year forecast for the full return picture.
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