Fixed Rate Repayment Calculator

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Rental Property ROI Calculator

Calculate the potential Cash-on-Cash Return on Investment for a residential rental property.

Investment Details

Financing & Income

(Taxes, Insurance, HOA, Maintenance savings)

Calculation Results

Total Initial Cash Invested: $

Estimated Monthly Mortgage (P&I): $

Monthly Cash Flow: $

Annual Cash Flow: $

Annual Cash-on-Cash ROI: %

function calculateRentalROI() { // 1. Get Inputs var purchasePrice = parseFloat(document.getElementById("purchasePrice").value) || 0; var downPayment = parseFloat(document.getElementById("downPayment").value) || 0; var closingCosts = parseFloat(document.getElementById("closingCosts").value) || 0; var repairCosts = parseFloat(document.getElementById("repairCosts").value) || 0; var interestRate = parseFloat(document.getElementById("interestRate").value) || 0; var loanTermYears = parseFloat(document.getElementById("loanTerm").value) || 0; var monthlyRent = parseFloat(document.getElementById("monthlyRent").value) || 0; var monthlyExpenses = parseFloat(document.getElementById("monthlyExpenses").value) || 0; // Basic validation to ensure essential numbers are present if (purchasePrice <= 0 || monthlyRent 0 && interestRate > 0 && loanTermYears > 0) { var monthlyRate = (interestRate / 100) / 12; var totalPayments = loanTermYears * 12; // Amortization formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ] monthlyMortgage = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, totalPayments)) / (Math.pow(1 + monthlyRate, totalPayments) – 1); } // 4. Calculate Cash Flow var totalMonthlyOutflow = monthlyMortgage + monthlyExpenses; var monthlyCashFlow = monthlyRent – totalMonthlyOutflow; var annualCashFlow = monthlyCashFlow * 12; // 5. Calculate ROI (Cash-on-Cash) var roiPercent = 0; if (totalInitialInvestment > 0) { roiPercent = (annualCashFlow / totalInitialInvestment) * 100; } else if (annualCashFlow > 0) { // Edge case: Infinite ROI if no money down, but positive cash flow roiPercent = 999.99; } // 6. Display Results document.getElementById("resultInitialInvestment").innerText = totalInitialInvestment.toFixed(2); document.getElementById("resultMortgage").innerText = monthlyMortgage.toFixed(2); document.getElementById("resultMonthlyCashflow").innerText = monthlyCashFlow.toFixed(2); document.getElementById("resultAnnualCashflow").innerText = annualCashFlow.toFixed(2); document.getElementById("resultROI").innerText = roiPercent.toFixed(2); document.getElementById("roiResults").style.display = "block"; }

Understanding Rental Property ROI (Cash-on-Cash Return)

When investing in real estate, it's crucial to look beyond just the potential appreciation of the property value. Successful investors focus heavily on "Cash Flow"—the net income the property generates every month after all expenses are paid. The Cash-on-Cash Return on Investment (ROI) is one of the most important metrics for evaluating this performance.

Unlike a simple ROI calculation that might look at total profit upon sale, Cash-on-Cash ROI measures the annual pre-tax cash flow relative to the actual "cash" you invested upfront to acquire the property. It answers the question: "For every dollar I put into this deal today, how many cents am I getting back in profit this year?"

The Key Components of the Calculation

  • Total Initial Investment: This isn't just the down payment. It includes closing costs (loan origination fees, title insurance, recording fees) and any immediate repair or renovation costs needed to get the property "rent-ready." For example, a $50,000 down payment plus $5,000 in closing costs and $5,000 in initial repairs equals a $60,000 total initial investment.
  • Monthly Cash Flow: This is your gross monthly rent minus all monthly obligations. This includes the mortgage principal and interest, property taxes, hazardous insurance, HOA dues (if applicable), and crucially, an allowance for maintenance and vacancies. A common mistake is underestimating operating expenses.
  • Debt Service (Mortgage): Your financing terms significantly impact ROI. A higher interest rate increases your monthly payment, directly reducing your cash flow and lowering your ROI.

Interpreting Your ROI Result

What constitutes a "good" ROI varies depending on the investor's goals, the market risk, and current interest rates. However, many buy-and-hold real estate investors target a Cash-on-Cash ROI between 8% and 12%.

If your calculation shows a negative ROI, it means the property costs more to own every month than it generates in rent. This is known as "negative cash flow." While some investors accept this in high-appreciation markets, it is generally considered risky for beginners. Use this calculator to screen potential properties and ensure the numbers support your investment goals before making an offer.

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