Cash-on-cash return calculator
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The formula, a worked example, and the specific way this measure gets misquoted.
How it works
Cash-on-cash measures the annual cash left after the mortgage against the cash you actually put in. It is the figure that answers "what does this pay me each year on the money I committed?"
The formula
cash-on-cash = (NOI - annual mortgage payments) / cash invested
- Fill in the yield tab first so NOI is right.
- Enter your deposit, rate and term on the mortgage tab.
- Read cash-on-cash against cash in — deposit plus buying costs.
Worked example
| Item | Value |
|---|---|
| Cash in | $88,500.00 |
| Net operating income | $14,900.00 |
| undefined | $16,580.40 |
| Monthly cash flow | -$1,680.40 |
| Cash-on-cash return | -1.9% |
The mistake to avoid
Using the deposit alone as the cash invested. Stamp duty, legal fees and any renovation are paid in cash too, and leaving them out overstates the return by exactly the share they represent.
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What is the difference between rental yield and cap rate?
Cap rate is net operating income divided by the property's value, and it deliberately ignores financing. Net yield divides the same income by what you actually spent to acquire the property, including stamp duty and fees. Cap rate compares buildings; net yield compares your deals. Neither accounts for the mortgage — that is cash-on-cash return.
Should buying costs be included in rental yield?
For net yield, yes. Stamp duty, legal fees and renovation are money you spent to own the asset, so measuring income against price alone flatters the result — by a full percentage point in markets with high transfer taxes. This calculator shows gross on price and gross on total side by side so the gap is visible rather than assumed.