DSCRRadar

Cash on cash return

Cash-on-cash is the yield on the money you actually put in, your annual pre-tax cash flow divided by your total cash invested. Unlike cap rate, it counts the mortgage. Enter a deal below to compute it live.

Modeled rate
6.8%
Down payment
25%
Cash-flowing metros
6 of 18
Best metro CoC
Birmingham +9.5%
30-yr mortgage
6.80%
DSCR loan
7.75%
Hard money
11.50%
Data source
Live Jun 19, 2026
-3.81%
Cash-on-cash return on $84,000 invested
Gross yield
8.00%
Cap rate
4.80%
NOI / yr
$14,400
Loan amount
$225,000
Monthly P&I
$1,467
DSCR
0.82
Annual cash flow
-$3,202
Cash-on-cash
-3.81%
GRM
12.50
Rent / price
0.67%

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

Cash-on-Cash = Annual Pre-Tax Cash Flow ÷ Total Cash Invested

Annual cash flow = NOI − annual debt service. Cash invested = down payment + closing costs + upfront rehab. Because the number counts financing, it can turn negative at today’s rates even when the cap rate still looks fine.

A worked example. Take Cleveland, the current Index leader. A $146,863 home renting for $1,461 a month, modeled at 25% down and a 6.8% mortgage with a 40% expense load, returns about +4.6% cash-on-cash and a 1.22 DSCR. The roughly $36,716 of equity earns a positive yield from day one, which is rare in 2026.
Why it matters in 2026. At a 6.8% mortgage with 25% down and a 40% expense load, a property needs roughly a 5.9% cap rate just to break even on cash flow. Below that the cash-on-cash return goes negative even though the cap rate can still look acceptable. That gap is what the Investor Yield Index measures across 18 metros.

What counts as a good number

No single cutoff fits every investor, but these bands match how most people read the result at today’s rates.

Cash-on-cashRead
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.
The 2026 reality. Across the 18 metros in the Investor Yield Index, modeled at 25% down and a 6.8% rate, only 6 run a positive cash-on-cash return. They are the cheaper Midwest and Southern markets, with the highest yields in Birmingham (+9.5%), Memphis (+8.8%), and Chicago (+4.8%). The pricier coastal and Sun Belt metros stay negative, which is why the Index ranks markets relative to each other rather than grading them all the same.

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 financed deals run 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 ignores the mortgage; cash-on-cash includes financing. Cap rate compares properties side by side; cash-on-cash measures your actual return on the capital you put in.

Related

Cap rate calculator → Full deal calculator → Which metros come closest →