Know your real return on every dollar you invest
Calculate your actual return on invested capital. Factor in down payment, closing costs, rehab, and financing to see what you really earn — not what the listing agent claims.
Enter your deal numbers below. Results update instantly.
Cash-on-Cash Return
6.71%
Moderate — may be acceptable for appreciation plays
Cap Rate
7.80%
Free — includes projections, scenarios & lender reports
Financing can boost or destroy your cash-on-cash return. Understanding which side you're on is critical before buying.
Cap Rate > Mortgage Rate
The property earns more than the loan costs. Financing amplifies your return. A 6.5% cap rate with a 6.0% mortgage means every borrowed dollar earns a spread — boosting CoC above cap rate.
Example: 6.5% cap, 75% LTV at 6%, 25% down
CoC Return ≈ 8.5% (cap rate amplified by leverage)
Cap Rate < Mortgage Rate
The loan costs more than the property earns. Financing drags down your return. A 5.0% cap rate with a 7.0% mortgage means each borrowed dollar loses money — you'd earn more paying all cash.
Example: 5% cap, 75% LTV at 7%, 25% down
CoC Return ≈ 2.0% (leverage destroys return)
In 2026's rate environment, positive leverage requires either higher-yielding deals or creative financing (seller carry, assumable loans, ARMs). The calculator above shows you exactly where your deal falls.
Cash-on-cash return is the most practical metric for leveraged real estate investors. It answers: "What percentage return am I earning on the actual cash I put into this deal?"
Annual Cash Flow ÷ Total Cash Invested
After-debt cash flow divided by all upfront cash: down payment + closing costs + rehab.
Down Payment + Closing Costs + Rehab
Include everything you put in upfront. Omitting costs inflates your return and gives a false picture.
Purchase Price: $200,000
Down Payment (25%): $50,000
Closing Costs: $5,000
Rehab: $10,000
Total Cash Invested: $65,000
Monthly Rent: $1,800
Annual Expenses: $8,400
Annual Debt Service: $11,580
Annual Cash Flow: $1,620
CoC Return: $1,620 ÷ $65,000 = 2.5%
Note how including closing costs and rehab drops the return vs. using just the down payment ($1,620 ÷ $50,000 = 3.2%). Always use total cash invested.
| CoC Return | Assessment | Typical Strategy |
|---|---|---|
| 12%+ | Excellent | Value-add, BRRRR, secondary markets |
| 8–12% | Strong | Buy-and-hold in most markets |
| 4–8% | Moderate | Primary markets, appreciation plays |
| < 4% | Weak | Rarely justified unless strong appreciation thesis |
Cash-on-cash return is a snapshot. A complete analysis also projects returns over the full hold period, accounting for rent growth, expense inflation, loan paydown, and exit cap rate — all of which DealForge models automatically.
Cash-on-cash (CoC) return measures the annual cash flow you earn on the actual dollars you invested. Formula: Annual Cash Flow ÷ Total Cash Invested. Unlike cap rate, CoC accounts for financing — so it shows your real return on equity.
Most buy-and-hold investors target 8–12% CoC return. Below 6% rarely justifies the risk unless you’re investing for appreciation. Above 15%, verify the numbers carefully. In 2026’s rate environment, 8–10% is a solid target for leveraged residential deals.
Include everything you put in upfront: down payment, closing costs, inspection fees, rehab/renovation costs, and any reserves required by the lender. Omitting closing costs or rehab inflates your return and gives a misleading picture.
Leverage amplifies returns in both directions. If the property’s cap rate is higher than your mortgage rate (positive leverage), financing boosts CoC. If the cap rate is below your mortgage rate (negative leverage), you’d earn more paying all cash.
No. CoC measures annual cash flow return only. True ROI also includes appreciation, principal paydown, and tax benefits. CoC is more conservative — it only counts the cash that hits your bank account each year.
Explore other metrics with these focused investment tools.
Cash-on-cash is one metric. DealForge gives you the full picture: cap rate, DSCR, amortization, scenario modeling, and lender-ready reports — all in one platform.
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