What a 9% Cash on Cash Return Looks Like

A 9% cash on cash return means the property pays you $9 a year for every $100 of cash you put into it. That is a good return for a financed long-term rental. It clears most investors' hurdle rate, covers real operating costs, and leaves appreciation and loan paydown as upside rather than the whole thesis.

A 9% return on a $250,000 rental

With 25% down and 3% closing costs, the cash invested is $70,000. A 9% return on that is $6,300 a year, or $525 a month, after every expense and the mortgage.

Rent needed: $2,770 a month (1.11% of price)
Collected after 5% vacancy: $31,578 a year
Operating expenses: $9,934 (31% of collected rent)
Net operating income: $21,644 (a 8.7% cap rate)
Debt service on the $187,500 loan: $15,349
Cash flow: $6,295 on $70,000 invested

The all-cash return on the same property at this rent would be 8.4%. Financing at 7.25% lifts the return because the loan costs less than the property yields.

Rent needed for 9% at other purchase prices

Same assumptions, different prices. The last column is rent as a percent of price, the quick screen investors use.

Price	Cash invested	Cash flow for 9%	Rent needed	Rent / price
$100k	$28,000	$2,520	$1,110	1.11%
$150k	$42,000	$3,780	$1,660	1.11%
$200k	$56,000	$5,040	$2,215	1.11%
$250k	$70,000	$6,300	$2,770	1.11%
$300k	$84,000	$7,560	$3,325	1.11%
$350k	$98,000	$8,820	$3,880	1.11%
$400k	$112,000	$10,080	$4,435	1.11%
$450k	$126,000	$11,340	$4,985	1.11%
$500k	$140,000	$12,600	$5,540	1.11%
$600k	$168,000	$15,120	$6,650	1.11%
$700k	$196,000	$17,640	$7,755	1.11%
$800k	$224,000	$20,160	$8,865	1.11%

How the down payment changes the rent needed

More cash in means a smaller loan and lower debt service, but also a bigger denominator. At 7.25% the two effects partly offset, and leverage still helps. On $250,000:

Down payment	Cash invested	Debt service	Rent for 9%
20%	$57,500	$16,372	$2,760
25%	$70,000	$15,349	$2,770
30%	$82,500	$14,326	$2,780
40%	$107,500	$12,279	$2,805
All cash	$257,500	$0	$2,935

Check your own deal against 9%

The calculator is loaded with the example above and a 9% target. Replace the numbers with yours.

Cash on cash return

8.99%

Good

Good. Beats most passive alternatives after accounting for the work.

$6,295 cash flow / $70,000 invested

Annual numbers

Gross scheduled income: $33,240
Vacancy: -$1,662
Operating expenses31% of collected rent: -$9,934
Net operating income: $21,644
Debt service$1,279.08 a month: -$15,349
Annual cash flow: $6,295
Monthly cash flow: $525

Cash invested

Down payment: $62,500
Closing costs: $7,500
Upfront repairs: $0
Total cash invested: $70,000

Other metrics

Cap rateNOI / price: 8.66%
All-cash returnFinancing helps your return: 8.41%
DSCR (NOI basis): 1.41
Payback on cash: 11.1 yrs

To hit 9.0%

Cash flow neededper year: $6,300
Rent neededper month, vs $2,770 now: $2,771
Max price at this rentvs $250,000 now: $249,942

9% cash on cash return questions

Is a 9% cash on cash return good?

Yes. A 9% return sits inside the 8 to 12% range most rental investors target. It covers real operating costs and pays a meaningful yield on the cash in the deal.

How much rent do I need for a 9% cash on cash return?

On a $250,000 property with 25% down at 7.25% and the standard expense assumptions, about $2,770 a month. That produces $6,300 of annual cash flow on $70,000 invested. The rent needed scales with price and drops when you put more down.

What cash flow is a 9% return on $75,000 invested?

$6,750 a year, or about $563 a month. Multiply the cash you have in the deal by 0.09 to get the annual cash flow a 9% return requires.