Cash on cash return is the metric serious investors live by. Here's exactly how to calculate it, what a good number looks like, and a free tool to run yours.
Cash on cash return tells you how hard your actual invested dollars are working. Unlike cap rate, it accounts for financing — which makes it the metric most rental investors rely on. In this guide, we'll cover 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. In plain terms, it answers a simple 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. That's why two investors buying the same property can earn very different cash-on-cash returns depending on their down payment and loan terms.
The cash on cash return formula
The math is refreshingly simple:
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
Imagine a Port St. Lucie rental priced at $320,000. You put down 25% ($80,000), plus $12,000 in closing and setup costs — so $92,000 invested. After all expenses and the mortgage, the property cash-flows $7,400 per year.
Therefore, your cash on cash return is $7,400 ÷ $92,000 = 8.0%. That's a healthy number in today's market.
Rather than calculate this by hand for every deal, use our rental property ROI calculator, which 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 6–10%. Coastal markets often land lower because prices are high, while inland counties like Highlands and St. Lucie can push past 10%. However, "good" depends on your goals — some investors accept a lower cash-on-cash return in exchange for stronger appreciation.
For a deeper look at the broader return picture, our compound interest calculator shows how reinvested cash flow grows 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 offer, and you'll quickly separate the cash-flowing winners from the money pits. Ready to find a deal that pencils out? Share your investment criteria and our team will send matching South Florida properties.
