Finance category
Mortgage, loan, investing, tax, and money calculators.
Cap Rate vs Cash-on-Cash Return Calculator
Compare the unlevered cap rate against the levered cash-on-cash return for the same property. The gap shows positive or negative leverage at today's rate.
Cap rate
7.32%
unlevered: NOI / price
Cash-on-cash
4.31%
levered: cash flow / cash invested
Leverage effect
-3.01% pts
negative leverage
Reading the comparison
Annual debt service: $23,637. Annual cash flow after debt: $4,563 on $105,750 invested.
Positive leverage: cap rate > loan constant. The property earns more on each borrowed dollar than the loan costs, boosting cash-on-cash above cap rate. Negative leverage: cap rate < loan constant — borrowing actually hurts your return. Cap rate compression and high rates push deals into negative leverage territory.
How to Use
- Enter purchase price, down payment %, and closing costs.
- Enter the property's annual NOI (build it elsewhere if needed).
- Enter the loan rate and term that drive debt service.
- Read the cap rate, cash-on-cash, and the leverage effect (positive or negative).
Frequently Asked Questions
What does positive vs negative leverage mean?
Positive leverage: cap rate exceeds the loan constant (annual debt service ÷ loan amount). Borrowing increases your return on equity. Negative leverage: cap rate is below loan constant — borrowing reduces return on equity.
Is negative leverage always bad?
Not always. Investors accept negative leverage when they expect rents to grow, the asset to appreciate, or rates to drop (allowing refinance). It just means today's cash-on-cash isn't the whole story.
Which is the more important metric?
Cap rate values the asset; cash-on-cash measures the return on your specific cash investment. Both matter — cap rate for valuation comparison across deals, cash-on-cash for budget impact.
How do I improve cash-on-cash without changing cap rate?
Lower the rate (refinance), put less cash down (more leverage), or reduce closing costs. Each of these cuts the denominator (cash invested) or the debt cost without changing NOI.
Related Calculators
Cap Rate Calculator
Standalone cap rate calculation.
Cash on Cash Return Calculator
Standalone cash-on-cash calculation.
DSCR Calculator
Lender ratio that pairs with cap rate vs cash-on-cash.
Equity Multiple Calculator
Lifetime return multiple including exit.
Cash Flow vs Appreciation Calculator
Compare current yield to projected appreciation return.
Rental Property Calculator
Run full rental analysis with both metrics.
More Finance Calculators
Browse all finance →AI Cost Calculator
Compare token costs across OpenAI, Anthropic, and Google AI models. Calculate monthly API spending for GPT-4o, Claude, Gemini, and more.
Tip Calculator
Calculate the perfect tip and split the bill between friends. Choose preset percentages or enter a custom tip amount.
Bill Splitter Calculator
Split an uneven restaurant bill by item, divide tax and tip proportionally, and see exactly who owes whom.
Discount Calculator
Calculate sale price, discount amount, stacked discounts, sales tax, and total savings for any markdown.
Gas Mileage Calculator
Calculate MPG or km/L, estimate trip fuel cost, and compare annual fuel expenses between two vehicles.
Sales Tax Calculator
Add sales tax to a price, reverse-calculate the pre-tax amount from a total, and estimate tax for multiple items on one receipt.
Keep exploring