Cash on Cash (CoC) Return Calculator
Measure the annual return on your actual cash investment.
Investment Analysis
Total Cash Invested:
Annual Net Cash Flow:
Cash on Cash Return:
Understanding the Cash on Cash (CoC) Calculator
The Cash on Cash (CoC) return is one of the most critical metrics for real estate investors. Unlike Cap Rate, which looks at the property's performance regardless of financing, CoC measures the actual "yield" on the specific dollars you take out of your pocket and put into the deal.
The Cash on Cash Formula
The math behind the CoC return is straightforward but powerful:
Key Components Explained
- Total Cash Invested: This includes your initial down payment, closing costs, and any immediate money spent on renovations or repairs to make the property rent-ready.
- Annual Pre-Tax Cash Flow: This is your net profit after all expenses (taxes, insurance, maintenance) and debt service (mortgage payments) have been paid for the year.
- Monthly Debt Service: This refers specifically to your mortgage payment. Note that only the interest portion is a true expense for tax purposes, but for CoC, we use the full payment because it represents cash leaving your bank account.
Real-World Example
Imagine you purchase a duplex with the following figures:
- Initial Investment: $45,000 (Down payment + Closing costs)
- Repairs: $5,000
- Monthly Rent: $2,000
- Monthly Expenses: $500
- Monthly Mortgage: $1,000
Your Total Cash Invested is $50,000. Your Monthly Cash Flow is $500 ($2,000 – $500 – $1,000). Your Annual Cash Flow is $6,000. Dividing $6,000 by $50,000 gives you a 12% Cash on Cash Return.
Why CoC is Important for Investors
CoC return helps investors compare real estate to other asset classes like stocks or bonds. If a rental property offers an 8% CoC return while a high-yield savings account offers 4%, the investor can quantify the "risk premium" they are earning by putting their capital into physical property.