Rental deal math

Know the return on your cash.

Cash-on-cash return compares a rental property's annual pre-tax cash flow with the cash you put into the deal. It helps you check an income claim against your own capital.

Create a free account to analyze a dealThe Deal Analyzer runs inside your account.

The screening formula

Cash-on-cash return = annual pre-tax cash flow ÷ total cash invested

Cash flow is what remains after operating expenses and debt payments in the modeled year. Include the down payment, closing costs, and initial work you paid for in cash in the denominator.

Example: $6,000 in modeled annual cash flow divided by $60,000 invested in cash is 10%. If future repairs reduce cash flow to $3,000, the same deal screens at 5%.

Inputs worth checking

Collected rent after vacancy and nonpayment
Maintenance, capital repairs, taxes, and insurance
Every cash cost needed to acquire and prepare the property
The actual loan payment, not a teaser rate

What this return does not measure

Cash-on-cash return does not capture a future sale price, taxes, principal paydown, or the timing of major repairs. A strong percentage from optimistic rent or low expense assumptions can be misleading. Compare a downside case before treating the result as a decision.

RealInvestorX keeps rent, financing, expenses, and saved decisions together. Create a free account to run the signed-in Deal Analyzer and save up to five deals.