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Rental Property Cash-on-Cash Return Calculator

Evaluate rental property returns and cash flow with cap rate and cash-on-cash metrics.

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Cash-on-cash return (annual %)

-9.3%

Annual cash return on your $92,000 investment.

Detailed results
Cap rate (NOI / price)4.3%
Annual cash flow-$8,528
Monthly cash flow-$711
Gross rent multiplier13.3

What this result means

Cash-on-cash return (annual %): -9.3%.

Cash-on-cash return: -9.3%. Cap rate: 4.3%. Monthly cash flow: $-711.

Annual Property Performance

Year 1 income, expenses, and cash flow breakdown.

Annual Property Performance. 11 rows, first 11 shown.
Line ItemAmount% of Gross Rent
Gross rental income$30,000100%
Vacancy loss$1,5005%
Effective gross income$28,50095%
Property tax$4,00013.3%
Insurance$1,2004%
Maintenance$4,00013.3%
Management fee$2,2808%
HOA/other$0.000%
NOI$17,02056.7%
Debt service (annual)$25,54885.2%
Cash flow-$8,528-28.4%

How this is calculated

NOI = Gross Rent − Vacancy − Operating Expenses. Cap Rate = NOI / Purchase Price. Cash-on-Cash = Annual Cash Flow / Total Investment. GRM = Price / Annual Rent.

Rental property returns are measured by cap rate (income yield) and cash-on-cash return (cash profit on actual money invested).

Cap Rate. Net Operating Income (NOI) ÷ purchase price. A 5% cap means you're earning 5% annually on the property value from operations. Cap rates vary by market and property quality; 4–8% is typical.

Cash-on-Cash Return. Annual cash flow ÷ total money invested (down payment + closing + rehab). This is the real return on your out-of-pocket dollars. A 10% cash-on-cash return beats most stock market returns.

The difference. Cap rate reflects the property's income-earning power. Cash-on-cash reflects your leverage (how much you borrowed). A property with a 5% cap can generate 10%+ cash-on-cash if you put 20% down and finance the rest.

Cash flow is king. A property with high cap rate but high debt service can have negative cash flow (you lose money monthly). Conversely, lower-cap-rate properties with low debt service generate positive cash flow. Choose based on your goals: appreciation vs. income.

The risk. Negative cash flow means you're subsidizing the investment monthly—risky if you have other expenses. Vacancy rates, maintenance surprises, and management fees often exceed estimates. Plan conservatively.

Assumptions

  • Vacancy rate is a percentage applied to gross rent; actual vacancies vary.
  • Maintenance is estimated as a percentage of purchase price; actual costs vary by property age and market.
  • Management fee is a percentage of rent; if self-managing, use 0%.
  • Mortgage payment is fixed throughout the loan term (no ARM).
  • No appreciation or depreciation modeled; calculator focuses on cash flow, not long-term wealth.

Frequently asked questions

›What's a good cap rate?

A good cap rate depends on your market and investment philosophy. Nationally, 4–8% is typical; competitive urban markets yield 3–4%, while less-demand areas may offer 8–12%. Cap rates roughly inverse with appreciation potential: high cap-rate properties often appreciate slowly, while low cap-rate properties in hot markets appreciate faster. Income-focused investors targeting steady cash flow prefer 6%+ cap rates, while appreciation-focused investors accept 3–4% knowing they'll rely on price growth rather than rental income.

›Should I aim for positive cash flow month-one?

Ideally yes—positive cash flow from day one means the property pays for itself and generates profit. Negative cash flow means you are subsidizing the investment every month, adding to your mortgage and maintenance costs. However, some sophisticated investors intentionally accept negative cash flow in early years if they forecast strong appreciation that will offset annual losses. This strategy is high-risk and requires substantial cash reserves to cover ongoing deficits without straining your finances.

›How do I estimate vacancy rate?

Research historical vacancy data for your specific area and property type, available from local property management associations and market reports. Urban areas with strong job markets typically see 3–5% vacancy, while rural or economically weaker regions experience 5–10% or higher. Conservative investors budget 5% as a baseline regardless of market conditions to account for tenant turnover, potential problem tenants, and unexpected downtime. Do not assume zero vacancy; it underestimates risk and leads to negative cash flow surprises.

›Should I self-manage or hire a property manager?

Self-managing saves 8–10% of gross rent (the property manager's fee), but requires your personal time for tenant communications, maintenance emergencies, lease disputes, and rent collection. A professional manager handles all this but costs 8–10% of rent. The decision hinges on cash flow and your time value: if monthly cash flow is under $500, self-managing might preserve enough profit to justify the time. If cash flow exceeds $500–1000 monthly, a property manager typically pays for itself by freeing your time and reducing costly mistakes.

›What if I plan to flip the property, not rent it?

This calculator is designed for rental income and cash-flow analysis, not property flipping. For a flip, the relevant metrics are purchase price, renovation costs, expected sale price, and holding period (speed to sale). Your ROI calculation would be (Sale Price − Purchase Price − Renovation Costs − Carrying Costs) / (Purchase + Renovation costs). Monthly cash flow is irrelevant for a flip; instead, focus on total project profit and time-to-close to determine if the deal meets your return threshold.

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