Cash-on-Cash Spread Calculator

Leverage adds value only when asset yield exceeds loan rate. This calculator sizes the spread and lift contribution.

Cash-on-cash return

All-in cost of debt

Loan to cost

Spread (bps)

200

Leverage lift

3.71%

Accretive?

Yes — accretive

How the math works

Spread = (CoC − debt cost) × 100. Leverage lift = spread × (LTC / (1 − LTC)). More leverage amplifies a positive spread and punishes a negative one.

If deal underwrites only with negative leverage, you're paying top dollar without a margin of safety. Wait for price cuts, rate cuts, or NOI lift. Don't rely on cap compression to save it.

How to Use

Enter cash-on-cash return.
Enter all-in cost of debt.
Enter loan-to-cost.
Read spread and leverage lift.

Frequently Asked Questions

Why spread?

Positive spread = debt accretes to returns. Negative spread = negative leverage; debt reduces equity return. Negative leverage is common in high-rate markets; know you have it.

Target spread?

200-400bps positive spread = healthy. Under 100bps = fragile. Negative = rethink deal (less leverage, different price, no deal).

Negative leverage OK?

Only if you expect rent growth to close the gap. Pay cash or lower leverage until deal flips accretive. Don't chase a growth story without conservative pricing.

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.