Rental Property ROI Calculator
Analyze your real estate investment potential with professional-grade metrics.
Investment Summary
Total Cash Invested:
$0
Monthly Mortgage (P&I):
$0
Monthly Cash Flow:
$0
Cap Rate:
0%
Cash on Cash Return:
0%
Understanding Rental Property ROI
Investing in real estate is one of the most reliable ways to build long-term wealth, but the numbers must make sense. Our Rental Property ROI Calculator helps you determine if a property is a "deal" or a "dud" by looking at the core financial metrics used by professional investors.
Key Metrics Explained
- Cap Rate (Capitalization Rate): This measures the property's natural rate of return without considering financing. It's the Net Operating Income divided by the purchase price.
- Cash on Cash (CoC) Return: This is the "yield" on the actual money you outlaid. It compares your annual pre-tax cash flow to the total amount of cash you invested (down payment + repairs).
- Net Cash Flow: The amount of money left in your pocket every month after every single expense, including the mortgage, has been paid.
Example Calculation
Imagine you buy a property for $200,000. You put 20% ($40,000) down and spend $5,000 on new flooring. Your total investment is $45,000.
If the property rents for $1,800 and your total expenses (mortgage, tax, insurance) are $1,400, your monthly cash flow is $400. Annually, that's $4,800. Your Cash on Cash Return would be $4,800 / $45,000 = 10.6%.
Factors That Influence Your Return
While this calculator provides a snapshot, remember to account for vacancy rates (usually 5-8%) and capital expenditures (savings for big items like a new roof). A property that looks profitable on paper can quickly turn negative if you don't budget for maintenance and the occasional month without a tenant.