Rental Property ROI Calculator
Purchase Information
Income & Expenses
Analysis Results
Monthly Mortgage (P&I):
$0.00
Monthly Expenses (incl. Mortgage):
$0.00
Net Operating Income (Monthly):
$0.00
Monthly Cash Flow:
$0.00
Cash on Cash Return (CoC):
0.00%
Cap Rate:
0.00%
Understanding Real Estate Investment Analysis
Investing in rental properties is one of the most reliable ways to build wealth, but simply buying a property and renting it out doesn't guarantee a profit. To succeed as a real estate investor, you must understand the numbers behind the deal. This Rental Property ROI Calculator is designed to help you analyze the profitability of a potential investment by looking at key metrics like Cash Flow, Cash-on-Cash Return, and Cap Rate.
What is Cash Flow?
Cash flow is the net amount of cash moving into and out of a business. In real estate, it is calculated by taking your total monthly income (rent) and subtracting all monthly expenses (mortgage, taxes, insurance, vacancy, repairs). Positive cash flow means the property generates income for you every month, while negative cash flow means you are paying out of pocket to hold the asset.
Key Metrics Explained
- NOI (Net Operating Income): This is your annual income minus operating expenses, excluding the mortgage payments. It helps evaluate the profitability of the property itself, regardless of financing.
- Cap Rate (Capitalization Rate): Calculated as
NOI / Purchase Price. This percentage helps compare the potential return of an investment property against others, assuming an all-cash purchase. A higher Cap Rate generally implies a better return (or higher risk). - Cash on Cash Return (CoC): This is arguably the most important metric for leveraged investors. It is calculated as
Annual Cash Flow / Total Cash Invested. It tells you exactly how hard your actual invested dollars are working for you.
How to Use This Calculator
Start by entering the Purchase Information, including the price and financing details. Accurate financing data is crucial for calculating your monthly mortgage payment. Next, input your Income & Expenses. Be realistic with your vacancy rates (5-8% is standard) and maintenance costs (typically 1% of property value per year). Once you click calculate, review the "Cash on Cash Return" to determine if the deal meets your investment criteria.
Common "Rules of Thumb"
While every market is different, many investors look for the 1% Rule, which suggests that the monthly rent should be at least 1% of the purchase price. Additionally, a Cash on Cash return of 8-12% is often considered a solid benchmark for a good rental investment.