DSCRCash on cash return
Cash-on-cash is your annual pre-tax cash flow divided by the cash you actually put in. It is the levered counterpart to cap rate. Enter a deal below to compute it live.
Assumptions: 25% down + 3% closing costs, 40% opex/vacancy load 30-year amortization. Lenders typically require DSCR ≥ 1.2. Estimates, not a quote.
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The cash-on-cash formula
Annual cash flow = NOI − annual debt service. Cash invested = down payment + closing costs + upfront rehab. This metric reflects financing, so at high rates it can go negative even when the cap rate looks fine.
What counts as a good number
There is no single threshold, but these bands match how most investors read the result at today’s rates.
| Cash-on-cash | Read |
|---|---|
| Above 8% | Strong. Hard to find on financed deals in 2026 without value-add or a low basis. |
| 5% to 8% | Reasonable for a stabilized rental at current rates. |
| 0% to 5% | Thin. The deal leans on appreciation and rent growth, not cash flow. |
| Below 0% | Negative carry. You feed the property each month and bet on the exit. |
Common questions
How is cash-on-cash return calculated?
Cash-on-cash = annual pre-tax cash flow ÷ total cash invested. Cash flow is NOI minus debt service; cash invested is your down payment plus closing and rehab costs.
What is a good cash-on-cash return?
Many investors target 8 to 12%, but in 2026’s rate environment 5 to 8% is more common and plenty of leveraged deals are negative. Compare the number against your opportunity cost and the risk-free rate before calling it good.
How is cash-on-cash different from cap rate?
Cap rate is unlevered (ignores the mortgage); cash-on-cash is levered (includes financing). Cap rate compares properties; cash-on-cash compares your actual return on capital.