# Cash-on-Cash Return Calculator | Rental DSCR

> Calculate cash-on-cash return for a rental property from price, down payment, rent, vacancy, expenses and loan terms, plus cash flow, DSCR and cap rate.

URL: https://raziel.co/tools/cash-on-cash-return-calculator

Work out a rental property’s year-one cash flow and the return on the cash you put in, plus DSCR and cap rate, from the price, rent, expenses and loan.

## Results

Cash-on-cash return

3.40%

$3,809 of year-one cash flow on $112,000 invested.

**Annual cash flow**

$3,809

**Monthly cash flow**

$317

**DSCR**

1.16

NOI / debt service

**Cap rate**

6.94%

NOI / price

**Net operating income**

$27,760

Per year

**Mortgage payment**

$1,996

On a $300,000 loan

**Cash invested**

$112,000

Down payment + closing

**Break-even occupancy**

85.7%

Rent needed to cover costs

**Year-one principal paydown**

$3,047

Equity, not cash flow

A DSCR of 1.16 covers the mortgage with a thin cushion. Many lenders look for 1.20 to 1.25 or more on rental loans.

Where a year of rent goes

$39K$41K

$11K$24K

Gross rentWhere it goes

- Vacancy
- Rent collected
- Operating expenses
- Debt service
- Cash flow

Real estate tracking is coming to Raziel

Start free today with your startups, funds and SPVs. Property tracking is on the way.

[Start free](https://app.raziel.co/sign-up)

The math

## How cash-on-cash is *calculated*

Start with the rent the property actually collects: gross rent less an allowance for vacancy and tenants who don’t pay. Subtract the costs of running it to get net operating income (NOI). Then subtract the mortgage. What is left is your cash flow, and dividing it by the cash you put in gives cash-on-cash return.

1. **NOI** describes the property on its own, before financing. Dividing it by the price gives the cap rate.
2. **Debt service** is twelve standard mortgage payments (principal and interest) on a fully amortizing loan.
3. **DSCR** compares NOI with debt service to show how much room there is if rent drops or costs rise.

Leverage cuts both ways. When the loan rate is below the cap rate, borrowing lifts cash-on-cash. When it is above, a bigger loan lowers it.

NOI = rent x 12 x (1 - vacancy) - expenses Debt service = monthly mortgage payment x 12 Cash flow = NOI - debt service Cash invested = down payment + closing costs Cash-on-cash = cash flow / cash invested DSCR = NOI / debt service Cap rate = NOI / purchase price

### Assumptions and simplifications

- Year one only: no rent growth, expense growth, appreciation, refinancing or sale.
- Pre-tax. Depreciation and interest deductions are not modeled.
- Fixed-rate, fully amortizing loan with monthly payments. Points and mortgage insurance belong in closing costs or expenses.

Worked example

### A $400,000 rental, 25% down at 7%

**Effective rent**

$40,800 - 5% = $38,760

**Operating expenses**

$11,000

**NOI**

$27,760

**Debt service**

$1,996 x 12 = $23,951

**Cash flow**

$3,809

**Cash invested**

$100,000 + $12,000 = $112,000

**DSCR / cap rate**

1.16 / 6.94%

Cash-on-cash**3.40%**

## Further reading

- [Raziel Learn Cap Rate vs IRR vs Cash-on-Cash: Which Number to Trust on a Deal](https://raziel.co/learn/cap-rate-vs-irr-vs-cash-on-cash)
- [Raziel Learn Understanding the Risks and Rewards of Private Real Estate](https://raziel.co/learn/understanding-private-real-estate-investing)
- [Raziel Learn Real Estate Investment Tracker: Private Deals Next to Funds and Startups](https://raziel.co/learn/real-estate-investment-tracker)

## Frequently Asked Questions

Common questions about the Cash-on-Cash Return calculator and the math behind it.

### What is cash-on-cash return?

Cash-on-cash return is a property’s annual pre-tax cash flow divided by the cash you put in to buy it (down payment plus closing costs). It shows the yield on your own money in year one, after the mortgage is paid, which makes it the go-to number for comparing leveraged rental deals.

### What is a good cash-on-cash return?

It depends on the market, interest rates and how much risk and work the property involves. Many investors look for a return that beats what they could earn on the same cash with less effort elsewhere. Compare deals in the same market against each other rather than against a single rule of thumb.

### How is cash-on-cash different from cap rate?

Cap rate is net operating income divided by the purchase price. It ignores financing, so it describes the property. Cash-on-cash subtracts debt service and divides by your cash invested, so it describes your deal. Leverage can push cash-on-cash above or below the cap rate depending on whether the loan costs more than the property yields.

### What is DSCR and why do lenders care?

Debt service coverage ratio is net operating income divided by annual mortgage payments. A DSCR of 1.25 means the property earns 25% more than it needs to pay the loan. Lenders use it to size loans on rental property; below 1.0 the rent does not cover the mortgage.

### Does cash-on-cash include appreciation or principal paydown?

No. It counts only cash that hits your account. Principal you repay builds equity and appreciation adds value, but neither is cash flow until you sell or refinance. The calculator shows year-one principal paydown separately so you can see that part of the return.

Related tools

## More free *calculators*

[All tools](https://raziel.co/tools)

- [Real estate Cap Rate Calculator Cap rate, NOI, gross rent multiplier and price per unit. Open calculator](https://raziel.co/tools/cap-rate-calculator)
- [Returns IRR Calculator Annualized return from any series of dated cash flows. Open calculator](https://raziel.co/tools/irr-calculator)
- [Returns MOIC Calculator Multiple on invested capital, realized and unrealized. Open calculator](https://raziel.co/tools/moic-calculator)