How this calculator works
Cash invested includes the down payment, acquisition costs and any initial cash-funded repairs. Annual cash flow starts with collected rent after vacancy, then deducts operating costs and twelve loan payments. This simple yield excludes appreciation, principal equity gains, sale proceeds and personal income tax.
Formula
Effective income = gross rent × (1 - vacancy). NOI = effective income - operating costs. Annual debt service = 12 × monthly loan payment. Cash-on-cash return = (NOI - debt service) / cash invested.
Worked example
With $100,000 invested, $30,000 potential rent, 5% vacancy, $8,000 costs and $500 monthly debt payments, cash flow is $14,500 and cash-on-cash return is 14.5%.
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Frequently asked questions
Do I include the full property price as cash invested?
Only if you paid all of it in cash. With financing, include the cash you actually contributed.
Why is principal repayment deducted?
It leaves your bank account as part of the loan payment, even though it builds equity.
Can the result be negative?
Yes. Negative annual cash flow produces a negative cash yield and signals a funding need.