Rental Property ROI Calculator
Analyze your potential real estate investment returns quickly.
Acquisition & Financing
Income & Expenses
How to Calculate Rental Property ROI
Investing in real estate requires a deep dive into the numbers to ensure a property will be profitable. This calculator evaluates four critical metrics for any landlord: Monthly Cash Flow, Cap Rate, and Cash on Cash (CoC) Return.
1. Cash on Cash Return (CoC): This is arguably the most important metric for rental investors. It measures the annual cash flow relative to the total amount of cash you actually invested (down payment + closing costs + repairs).
Formula: (Annual Cash Flow / Total Cash Invested) x 100
2. Cap Rate (Capitalization Rate): This measures the property's natural rate of return without considering financing. It helps you compare the profitability of different properties regardless of how they are paid for.
Formula: (Annual Net Operating Income / Purchase Price) x 100
Example Calculation
Imagine you buy a property for $200,000. You put 20% down ($40,000) and spend $10,000 on repairs and closing costs. Your total "Cash In" is $50,000. If your monthly rent is $1,800 and your total monthly expenses (mortgage, taxes, insurance, maintenance) are $1,400, your monthly cash flow is $400.
Annual Cash Flow = $4,800.
Cash on Cash Return = ($4,800 / $50,000) = 9.6%.
What is a "Good" ROI for Rental Property?
While this varies by market, many investors look for a Cash on Cash return of 8-12%. In "high-growth" markets like Austin or Seattle, investors might accept a lower CoC (2-4%) because they expect high appreciation. In "cash flow" markets like the Midwest, investors often demand 10% or higher.