What is a good cash on cash return on rental property?

A good cash on cash return is 8-12% for most rental property investments. Above 12% is excellent. Below 5% means your capital may earn better returns in other investments.

Is cash on cash return the same as ROI?

No. Cash on cash only measures cash flow return on your invested cash. Total ROI includes appreciation, principal paydown, and tax benefits. A property with 8% CoC might have 15-25% total ROI.

What is infinite cash on cash return?

Infinite CoC occurs when you recover all invested capital through a refinance but still own a cash-flowing property. Since you have $0 of your own money in the deal, any positive cash flow represents an infinite return.

Cash on Cash Return Explained

The most practical metric for real estate investors — measuring the actual return on the money you put in.

Updated March 2026|By becvio Research

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What is Cash on Cash Return?

Cash on cash return (CoC) measures the annual pre-tax cash flow from a rental property as a percentage of the total cash you invested. Unlike cap rate which ignores financing, CoC accounts for your mortgage payments and tells you what your actual out-of-pocket money is earning. If you invested $30,000 as a down payment and the property generates $3,600 per year in cash flow after all expenses and mortgage payments, your cash on cash return is 12%.

Cash on Cash Formula

Cash on Cash Return = (Annual Pre-Tax Cash Flow / Total Cash Invested) x 100. Annual pre-tax cash flow is: (Monthly Rent x Occupancy Rate) minus all operating expenses (taxes, insurance, maintenance, management) minus mortgage payment, multiplied by 12. Total cash invested includes: down payment, closing costs, rehab costs, and any other out-of-pocket expenses to acquire and prepare the property.

What is a Good Cash on Cash Return?

Most experienced investors target 8-12% cash on cash return. Above 12% is excellent — your money is working very hard. 5-8% is acceptable, especially in appreciating markets. Below 5%, consider whether a standard index fund or REIT might generate better returns with less effort. BRRRR deals that recover all invested capital can achieve infinite cash on cash returns since the denominator becomes zero.

Cash on Cash vs Cap Rate

Cap rate measures the property's return on its total value regardless of financing. Cash on Cash measures the return on your actual cash invested. They can be very different numbers. A property with a 6% cap rate might deliver 12% cash on cash if you use leverage (a mortgage). This is because leverage amplifies returns when the property yields more than the mortgage rate costs.

How to Improve Cash on Cash

To improve CoC: increase rent, decrease vacancy, reduce operating expenses, refinance to lower payments, or reduce total cash invested (through BRRRR or seller financing with lower down payment). The fastest improvement usually comes from raising rent to market rate and reducing vacancy through better tenant screening and property presentation.