What Is a Good Cash-on-Cash Return for Rentals?

What is a good cash-on-cash return?

A good cash-on-cash return for a long-term rental generally falls between 8% and 12% on an annual basis. Anything above 12% is strong and worth a hard second look to confirm the numbers are real; anything under 6% usually means you're either overpaying, over-leveraged on a bad rate, or betting entirely on appreciation instead of cash flow.

But that range is a starting point, not a rule. What counts as "good" depends on your strategy, your market, your cost of capital, and what else you could do with the same dollars. This guide breaks down how to set the right target for your deal instead of borrowing someone else's.

A quick refresher on what the number measures

Cash-on-cash return (CoC) is your annual pre-tax cash flow divided by the total cash you put into the deal. It answers one blunt question: for every dollar of your own money invested, how many cents come back to you each year?

• Annual cash flow = rent minus all operating expenses minus debt service.
• Cash invested = down payment + closing costs + rehab + any upfront reserves.

Example: You put $60,000 of cash into a property and it throws off $6,000 in annual cash flow after everything. That's a 10% cash-on-cash return. If you need the full walkthrough, see how to calculate cash-on-cash return on a rental.

Unlike cap rate, CoC accounts for financing — so leverage, interest rate, and loan terms swing it dramatically.

Benchmarks by strategy and property type

There is no single "good" number. Calibrate to the play:

Turnkey / stabilized long-term rentals

• Target: 8%–12%. These are lower-risk, lower-headache assets. A 9% CoC on a clean, tenant-occupied property in a stable metro is a solid outcome.

Value-add and BRRRR

• Target: 12%+ — or effectively infinite. When you refinance and pull most of your cash back out, the denominator shrinks toward zero and CoC can spike. Don't get seduced by the number; verify the refinance appraisal and rent assumptions are real. Your BRRRR analysis should stress-test the refi before you celebrate.

Small multifamily (2–4 units)

• Target: 9%–14%. More units usually mean more cash flow per dollar, but also more turnover and management drag. Vacancy and repair reserves matter more here.

Short-term / mid-term rentals

• Target: 12%+. Higher gross income, but far more volatile expenses and operational risk. Demand a bigger cushion to justify the extra work.

Appreciation markets

• In high-cost coastal metros, investors often accept 4%–6% CoC because the total-return picture leans on appreciation and loan paydown. That's a legitimate strategy — as long as you know you're making that bet on purpose.

The benchmark that actually matters: your cost of capital

Here's the rule seasoned investors live by: your cash-on-cash return should comfortably beat your risk-free and low-risk alternatives.

If safe, liquid instruments are paying you a few percent for zero effort, a rental that only nets 5% CoC — with tenants, repairs, and illiquidity attached — is not paying you enough for the risk and hassle. The spread over your alternatives is your real compensation. A good target is a CoC that beats those alternatives by a meaningful margin, typically several percentage points.

This is why the same 7% deal can be "great" for one investor and "pass" for another. Context is the answer.

Why a high cash-on-cash return can still be a bad deal

A fat CoC number can hide serious problems. Watch for these traps:

• Understated expenses. If the pro forma skips capital reserves, property management, or realistic vacancy, the CoC is fiction. Budget vacancy (often 5%–8%), maintenance, capex, and management even if you self-manage.
• Class-D risk dressed up as yield. Rough neighborhoods can show 15%+ on paper and deliver 4% in reality once evictions, turnover, and non-payment hit. High advertised yield often is the risk premium.
• Teaser financing. A low adjustable rate or interest-only period can inflate early cash flow that evaporates on reset.
• Deferred maintenance. A roof, HVAC, or sewer line due in year two can wipe out several years of cash flow.

A 9% CoC backed by conservative, verified numbers beats a 14% CoC built on hope every single time.

How to set — and defend — your target number

Work through this before you make an offer:

1. Define your strategy. Cash flow, appreciation, or a blend? That sets your minimum acceptable CoC.
2. Pin down your cost of capital. Know the return you're walking away from elsewhere.
3. Underwrite with real expenses. Use actual property taxes, current insurance, market rent, and honest vacancy and reserves — not seller-provided fantasy.
4. Pressure-test it. Model rent 5% lower and expenses 10% higher. If the deal still clears your target, it's durable.
5. Compare CoC alongside other metrics. Pair it with cap rate and total return so one number doesn't run the whole decision.

Where the data problem comes in

Every CoC benchmark above collapses if your inputs are wrong. Guess the taxes, eyeball the rent, forget the reserves — and your "11%" is really 6%. That's the quiet killer in most spreadsheets: garbage in, confident-looking output.

This is exactly where analyzing deals against real data changes the game. Tools like PropertyWiz AI pull live, verified market value, rent, property taxes, insurance, and vacancy the moment you load a property, then stress-test the cash-on-cash return in real time — so the number you're judging is grounded in actual market conditions, not optimistic typing.

The bottom line

A good cash-on-cash return is 8%–12% for a stabilized rental, 12%+ for value-add and higher-effort strategies, and lower only when you're deliberately buying appreciation. But the truest test isn't a benchmark from a blog — it's whether the return beats your alternatives after you've underwritten the deal with honest, verified numbers. Get the inputs right first, and the "good number" takes care of itself.