Cash vs. Mortgage Rental Property Calculator
Compare the same rental bought with cash or a mortgage. See the extra income alongside the extra cash you would commit.
Free to use. No account needed.
Example shown. Adjust the assumptions
Cash versus your mortgage
$787 more cash flow / month with cash
Buying without a mortgage requires $112,500 more upfront, including each option’s closing costs.
25% down
All cash
| Measure | Financed | All cash |
|---|---|---|
| Upfront cash | $53,500 | $166,000 |
| Monthly loan payment | $787 | $0 |
| Principal repaid in year 1 | $1,037 | $0 |
Before tax and appreciation. Excludes returns on retained cash and recurring loan-only fees such as PMI.
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Using the result
Compare both the monthly income and the cash committed to the property.
Compare income and capital, side by side
Both options use the same rent, vacancy, management, maintenance, reserves, taxes, insurance and other owner costs. The financed option uses your down payment and amortizing mortgage. The cash option has no mortgage payment.
Cash-on-cash return = first-year cash flow ÷ upfront cash invested
Upfront cash includes the down payment, the closing costs for that option and initial repairs. Enter separate cash-purchase closing costs in the assumptions. Ongoing loan-only fees such as mortgage insurance are excluded from this comparison. Loan principal repaid is shown separately because it builds equity but does not arrive as spendable cash.
This first-year comparison does not include appreciation, tax deductions, resale costs or returns on money kept outside the property. Those can change the decision. It also does not assume that the option with the highest cash flow is the best use of your money.
Example with these assumptions
In the example, a 25% down purchase leaves $263 a month and uses $53,500 upfront. All cash leaves $1,050 a month and uses $166,000 upfront. The difference in income comes with $112,500 more cash committed to the property.
Before income tax. Verify inputs and estimates before acting. Terms & privacy.
Common questions
Why can the higher cash-flow option have a lower return?
Cash-on-cash return divides annual cash flow by your upfront cash. Removing a mortgage raises monthly income but also increases the cash invested. The relative change in those two amounts determines the return.
Does the mortgage payment include principal?
Yes. The full principal-and-interest payment reduces cash flow. The first year’s principal repaid is also shown as equity gained, separately from cash income. It is not added back into cash-on-cash return.
What about investing the cash I keep by borrowing?
That potential return is outside this property-only comparison. Compare it separately using a return, risk and liquidity assumption you are comfortable with. Retained cash itself is not investment profit.
What carries into the full property analyzer?
Your selected price, financing, rent, costs, reserves and repairs. The new analysis starts with 3% annual rent and fixed-cost growth, both editable. Growth does not affect the first-year results here.