Cash on Cash Return Calculator

A cash on cash return above 8-10% is generally considered excellent for rental properties, though target returns vary by market and risk level.

Factor in all costs including property management (typically 8-10% of rent), maintenance reserves (1-2% of property value), and vacancy allowances (5-10% of annual rent).

Your down payment size directly impacts CoC return - larger down payments reduce leverage but often improve cash flow stability.

Consider the 1% rule: monthly rent should be at least 1% of purchase price for positive cash flow in most markets.

Don't forget hidden costs like capital improvements, tenant turnover expenses, and potential special assessments for condos.

Cash on cash return measures current cash flow but doesn't account for appreciation, principal paydown, or tax benefits - consider all return components.

Higher leverage (smaller down payment) can increase CoC return but also increases risk and typically requires stronger cash reserves.

Location matters more than numbers - invest in areas with strong job growth, population increases, and diverse economies.

Calculate worst-case scenarios with higher vacancy rates and maintenance costs to ensure your investment can weather downturns.

Track your actual vs. projected returns quarterly and adjust your investment criteria based on real-world performance data.