*NOI = Net Operating Income (Income minus operating expenses, excluding mortgage).
Rental Property ROI Calculator: Real Estate Investment Analysis
Investing in real estate is one of the most powerful ways to build wealth, but it relies heavily on the numbers. Unlike stocks, where the price is the price, real estate profitability depends on your specific financing structure, operating expenses, and rental income. This Rental Property Cash Flow Calculator helps investors analyze potential deals to ensure they generate positive cash flow rather than monthly losses.
Why You Need a Specialized Rental Calculator
Many first-time investors make the mistake of only looking at the mortgage payment versus the rent. However, a property that costs $1,500 in mortgage and rents for $1,800 is not necessarily making $300 a month. Once you factor in vacancy reserves, repairs, insurance, and taxes, that "profit" can quickly turn into a deficit. This calculator accounts for the critical variables that affect your bottom line.
Understanding Key Metrics
1. Monthly Cash Flow
This is your pure profit after everything is paid. It is calculated as:
Positive cash flow is the lifeline of a rental investor. It provides passive income and a buffer against unexpected repairs.
2. Cash on Cash Return (CoC ROI)
This metric tells you how hard your actual cash is working. If you put $50,000 down on a house and it generates $5,000 a year in profit, your Cash on Cash return is 10%. This is often more important than the total value of the home because it compares real estate directly to other investments like stocks or bonds.
3. Cap Rate (Capitalization Rate)
Cap Rate measures the natural profitability of a property assuming you paid all cash. It helps you compare the quality of the property itself, independent of how you financed it (the loan). A higher Cap Rate generally indicates higher risk or higher potential return.
How to Use This Calculator
Purchase Price: The contract price of the home.
Down Payment: The percentage you are putting down (usually 20-25% for investment loans).
Vacancy Rate: The estimated time the property sits empty. 5% (about 18 days a year) is a standard conservative estimate.
HOA/Maintenance: Always budget for repairs! Even if there is no HOA, put money aside here for leaky faucets or roof patches.
Example Scenario
Let's say you buy a property for $200,000 with 20% down. Your loan is $160,000. If your total monthly expenses (mortgage, tax, insurance, etc.) are $1,400 and you rent it for $1,700, your cash flow is $300/month. Over a year, that is $3,600. Since you invested roughly $45,000 (down payment + closing costs), your Cash on Cash return is approximately 8%. This is a solid, steady return for a rental property.
function calculateRentalROI() {
// 1. Get Inputs
var price = parseFloat(document.getElementById('rpc_price').value);
var downPercent = parseFloat(document.getElementById('rpc_down_percent').value);
var interestRate = parseFloat(document.getElementById('rpc_interest').value);
var termYears = parseFloat(document.getElementById('rpc_term').value);
var closingCosts = parseFloat(document.getElementById('rpc_closing').value);
var monthlyRent = parseFloat(document.getElementById('rpc_rent').value);
var annualTax = parseFloat(document.getElementById('rpc_tax').value);
var annualInsurance = parseFloat(document.getElementById('rpc_insurance').value);
var monthlyHOA = parseFloat(document.getElementById('rpc_hoa').value);
var vacancyRate = parseFloat(document.getElementById('rpc_vacancy').value);
// Validate Inputs
if (isNaN(price) || isNaN(monthlyRent) || isNaN(interestRate)) {
alert("Please enter valid numbers for Price, Rent, and Interest Rate.");
return;
}
// 2. Perform Calculations
// Mortgage Calc
var downPaymentAmt = price * (downPercent / 100);
var loanAmount = price – downPaymentAmt;
var monthlyRate = (interestRate / 100) / 12;
var totalPayments = termYears * 12;
var mortgagePayment = 0;
if (interestRate === 0) {
mortgagePayment = loanAmount / totalPayments;
} else {
mortgagePayment = (loanAmount * monthlyRate) / (1 – Math.pow(1 + monthlyRate, -totalPayments));
}
// Monthly Expenses Breakdown
var monthlyTax = annualTax / 12;
var monthlyInsurance = annualInsurance / 12;
var monthlyVacancyCost = monthlyRent * (vacancyRate / 100);
// Total Monthly Expenses (Operating + Debt Service)
var totalMonthlyExpenses = mortgagePayment + monthlyTax + monthlyInsurance + monthlyHOA + monthlyVacancyCost;
// Operating Expenses ONLY (for NOI) -> Excludes Mortgage Principal & Interest
var operatingExpenses = monthlyTax + monthlyInsurance + monthlyHOA + monthlyVacancyCost;
// Cash Flow
var monthlyCashFlow = monthlyRent – totalMonthlyExpenses;
var annualCashFlow = monthlyCashFlow * 12;
// Investment
var totalInitialInvestment = downPaymentAmt + closingCosts;
// Metrics
var cocROI = 0;
if (totalInitialInvestment > 0) {
cocROI = (annualCashFlow / totalInitialInvestment) * 100;
}
var annualNOI = (monthlyRent * 12) – (operatingExpenses * 12);
var capRate = 0;
if (price > 0) {
capRate = (annualNOI / price) * 100;
}
// 3. Display Results
// Helper formatter
var fmtMoney = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' });
var fmtPercent = new Intl.NumberFormat('en-US', { minimumFractionDigits: 2, maximumFractionDigits: 2 });
document.getElementById('res_cashflow').innerHTML = fmtMoney.format(monthlyCashFlow);
document.getElementById('res_coc').innerHTML = fmtPercent.format(cocROI) + "%";
document.getElementById('res_cap').innerHTML = fmtPercent.format(capRate) + "%";
document.getElementById('res_expenses').innerHTML = fmtMoney.format(totalMonthlyExpenses);
document.getElementById('res_noi').innerHTML = fmtMoney.format(annualNOI / 12); // Monthly NOI
document.getElementById('res_investment').innerHTML = fmtMoney.format(totalInitialInvestment);
// Color coding
var cashFlowEl = document.getElementById('res_cashflow');
if (monthlyCashFlow >= 0) {
cashFlowEl.classList.remove('negative');
cashFlowEl.classList.add('positive');
} else {
cashFlowEl.classList.remove('positive');
cashFlowEl.classList.add('negative');
}
// Show result section
document.getElementById('rpc_results_area').style.display = 'block';
// Optional: Scroll to results
document.getElementById('rpc_results_area').scrollIntoView({ behavior: 'smooth' });
}