Cash-on-Cash Return Calculator
Calculate pre-tax cash flow, total equity invested, and the cash-on-cash return for commercial real estate properties.
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How it works
Follow the underwriting path lenders use: input the deal, apply constraints, then read the result.
Calculate pre-tax cash flow
Subtract annual debt service from Net Operating Income (NOI).
Cash-on-Cash Return Formula
Cash-on-Cash Return measures annual pre-tax cash flow relative to total cash invested. Compare positive and negative leverage to see how debt payments change the cash yield.
Read the calculation methodology and limitations.
Cash-on-Cash Return = (NOI - Annual Debt Service) / Total Equity InvestedIf NOI is $100k, Debt Service is $60k, and you invested $400k in equity, the Cash-on-Cash return is ($100k - $60k) / $400k = 10%.
See This Calculator in Action
Explore institutional underwriting examples. Load any scenario into the live calculator with one click to customize rates, amortization, and property valuation.
Leveraged acquisition
Cash-on-Cash Return = (NOI - Annual Debt Service) / Total Equity Invested$300,000 of pre-tax cash flow on $3.6M of equity.
Underwriting Metric Comparison & Lender Sizing Standards
Compare debt yield against DSCR and LTV constraints, and review typical sizing assumptions across lender types.
Loan Sizing Constraints
3 Core Sizing TestsNOI / Minimum Debt YieldIncome cushion
(NOI / Minimum DSCR) / Loan ConstantPayment coverage
Value x Max LTVCollateral leverage
| Constraint | Formula | What It Protects |
|---|---|---|
| Debt Yield | NOI / Minimum Debt Yield | Income cushion |
| DSCR | (NOI / Minimum DSCR) / Loan Constant | Payment coverage |
| LTV | Value x Max LTV | Collateral leverage |
Worked examples
| Scenario | Calculation | Result |
|---|---|---|
| High leverage | $40k cash flow / $200k equity | 20% Cash-on-Cash Return |
| All-cash purchase | $100k NOI / $1M purchase price | 10% Cash-on-Cash Return (equals Cap Rate) |
| Negative cash flow | NOI less than Debt Service | Negative Cash-on-Cash Return |
Conversion reference
| Metric | Formula | What It Measures |
|---|---|---|
| Cash-on-Cash | Pre-Tax Cash Flow / Total Equity | Current yield on invested capital |
| Cap Rate | NOI / Purchase Price | Unlevered property yield |
| IRR | Discount rate of cash flows | Total annualized return over hold period |
Quick facts
- Cash-on-Cash Return does not account for principal paydown, appreciation, or tax benefits.
- It is a snapshot metric, usually looking at Year 1 stabilized cash flow.
- If a property is purchased all-cash, the Cash-on-Cash return equals the Cap Rate.
Editorial Team
Commercial Real Estate Finance Reviewers
- Calculations reviewed against standard CRE lending formulas for DSCR, LTV, cap rate, and debt yield
- Methodology cross-checked against lender-style loan sizing using NOI, value, loan constant, DSCR, LTV, and debt yield
Our editorial team builds and reviews commercial real estate finance calculators around the way lenders actually size debt: property income, collateral value, annual debt service, and lender risk thresholds. Results are educational screening estimates, not loan quotes, tax advice, legal advice, or a commitment to lend.
Methodology: formulas are calculated from borrower-entered inputs using standard CRE underwriting relationships for NOI, debt yield, DSCR, LTV, cap rate, loan constant, and maximum loan proceeds.
Reviewer note: pages are reviewed for formula accuracy and updated when lender benchmarks or site methodology changes.
Disclaimer: results are educational estimates only and are not financial, legal, tax, valuation, or lending advice.
Frequently asked questions
Targets vary widely by investor and risk profile, but many commercial investors aim for 8% to 12% cash-on-cash returns.
No. It only measures cash flow generated from operations against the initial cash invested. It ignores capital appreciation and loan principal paydown.