Cash on Cash Return: How to Calculate It (Free Calculator)

Cash on cash return tells you how hard your actual invested dollars are working. Unlike cap rate, it accounts for financing, which is why most rental investors rely on it. This guide covers the formula, a real South Florida example, and what counts as a strong return in 2026.

What is cash on cash return?

Cash on cash return is the annual pre-tax cash flow divided by the total cash you invested. It answers one question: for every dollar you put in, how much comes back each year?

Because it uses real out-of-pocket cash, it reflects your leveraged return. Two investors can buy the same property and earn very different cash-on-cash returns based on their down payment and loan terms.

The cash on cash return formula

The math is straightforward:

Cash on Cash Return = Annual Pre-Tax Cash Flow / Total Cash Invested

Annual cash flow is your rental income minus all operating expenses and mortgage payments. Total cash invested includes your down payment, closing costs, and any upfront repairs.

A worked example

Take a Port St. Lucie rental priced at $320,000. You put down 25 percent ($80,000), plus $12,000 in closing and setup costs, so $92,000 invested total. After all expenses and the mortgage, the property cash-flows $7,400 per year.

That gives a cash on cash return of $7,400 divided by $92,000, which is 8.0 percent. That is a healthy number in this market.

Rather than run this by hand for every deal, use our rental property ROI calculator. It outputs cash-on-cash return automatically alongside cap rate and monthly cash flow.

What is a good cash on cash return?

Most South Florida investors aim for 6 to 10 percent. Coastal markets often land lower because prices are high. Inland counties like Highlands and St. Lucie can push past 10 percent. What counts as "good" depends on your goals. Some investors accept a lower cash-on-cash return in exchange for stronger appreciation.

For a broader view of the return picture, our compound interest calculator shows how reinvested cash flow compounds over time.

Put the number to work

Cash on cash return turns a gut feeling into a clear decision. Run it on every property before you make an offer and you will quickly separate the cash-flowing deals from the money pits. Ready to find a property that pencils out? Share your investment criteria and our team will send matching South Florida properties.