Cash on Cash Return Calculator for BRRRR Investment Strategy
An investor using the BRRRR strategy with $18,000 annual cash flow after refinancing and $100,000 left in the deal.
Calculate the annual cash-on-cash return percentage based on annual pre-tax cash flow and total cash invested. Enter your Annual Pre-Tax Cash Flow, Total Cash Invested to get an instant cash on cash return. Formula: (annual_cash_flow / total_cash_invested) * 100.
Cash on Cash Return
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How It Works
How It Works
The Cash on Cash Return Calculator measures how much annual profit you earn compared to the actual cash you invested. It focuses only on the money you put into the deal, not the total property value.
The calculator divides your Annual Pre-Tax Cash Flow by your Total Cash Invested and then multiplies the result by 100 to turn it into a percentage.
- Uses the formula: (annual_cash_flow / total_cash_invested) × 100
- Annual Pre-Tax Cash Flow is the profit left after expenses, before taxes
- Total Cash Invested includes your down payment and upfront costs
- The result shows your yearly return as a percentage
Understanding the Results
The result tells you how efficiently your invested cash is working for you each year. A higher percentage means your money is generating stronger returns.
This metric helps investors compare different properties and decide where their cash will perform best.
- A 10% result means you earn 10% of your invested cash per year
- Higher percentages generally indicate better cash flow performance
- It does not include property appreciation or tax benefits
- Useful for comparing multiple investment opportunities
Frequently Asked Questions
What is cash-on-cash return in real estate investing?
Cash-on-cash return measures the annual pre-tax cash flow you earn relative to the total cash you invested in a property. It shows how effectively your invested cash is generating income. This metric is especially useful for comparing different investment opportunities.
When should I use the Cash on Cash Return Calculator?
Use this calculator when you want to evaluate the performance of a rental property based on actual cash invested. It is particularly helpful after accounting for your down payment, closing costs, and any renovation expenses. Investors commonly use it to compare leveraged real estate deals.
What counts as annual pre-tax cash flow?
Annual pre-tax cash flow is the amount of money left after paying operating expenses and debt service, but before taxes. It includes rental income minus expenses such as mortgage payments, insurance, property taxes, maintenance, and management fees. This number reflects the cash you actually take home before taxes.
What should be included in total cash invested?
Total cash invested includes your down payment, closing costs, renovation costs, and any other upfront cash expenses. It should only include money you personally put into the deal. Loan amounts are not included because they are not your cash investment.
How is cash-on-cash return calculated?
The formula divides your annual pre-tax cash flow by your total cash invested, then multiplies the result by 100 to express it as a percentage. For example, if you earn $10,000 annually and invested $100,000, your cash-on-cash return would be 10%. This percentage helps you quickly assess profitability.
Is a higher cash-on-cash return always better?
A higher percentage generally indicates stronger cash flow relative to your investment. However, it should be evaluated alongside other metrics like appreciation potential, risk level, and market conditions. A balanced analysis ensures you choose investments aligned with your financial goals.
Disclaimer
This financial calculator provides estimates only. Actual results may vary. Consult a qualified financial advisor for personalized guidance. Disclaimer.